Two natural gas storage projects received favorable rulings from FERC on Wednesday. Aquila affiliate Red Lake Gas Storage LP received preliminary approval on nonenvironmental grounds for construction of a salt cavern natural gas storage facility in Mohave County, AZ, with 12 Bcf of working gas capacity and 900,000 Dth/d of maximum deliverability. FERC also awarded a limited jurisdiction blanket certificate to Saltville Storage Co. LLC, which is building a salt cavern in southwestern Virginia.

The Saltville certificate allows the company, which is a joint venture of Duke Energy and NUI Corp., to provide firm and interruptible storage services to customers whose gas supplies ultimately will be transported out of Virginia. The Saltville storage facility itself is state regulated and was approved by Virginia regulators last fall. It is expected to begin service from the first of its new caverns in Smyth and Washington Counties, VA, later this spring.

NUI Saltville Storage Inc. and Duke Energy plan to leach four salt caverns over five years with anticipated working capacity of 1.112 Bcf from the first cavern, 0.144 Bcf in the second, 0.565 Bcf in the third and 4.395 Bcf in the last cavern. The project also calls for construction of a seven mile, 24-inch diameter pipeline originating in Saltville, VA, and terminating in Chilhowie, VA, with interconnections with Duke’s East Tennessee Natural Gas pipeline and NUI subsidiary Virginia Gas Pipeline Co.

In Arizona, Aquila’s Red Lake Storage is planning two salt caverns with 4-8 Bcf of working gas capacity in each, 1.5 Bcf of base or cushion gas in each and a maximum injection rate of 450 MMcf/d for both caverns combined. The project also will include 31 miles of header pipeline and 33,000 hp of compression.

FERC denied market based rates for the facility, concluding that Aquila, which also owns Market Hub Partners’ Lodi storage cavern in San Joaquin County, CA, could have too much market power in the region during peak demand periods.

“The Commission finds Red Lake could exercise unmitigated market power in the relevant interstate storage markets during peak periods for the foreseeable future,” FERC said in its preliminary determination.

The proposed Red Lake storage caverns and header line would interconnect with El Paso Natural Gas, Transwestern Pipeline and Questar Corp.’s Southern Trails Pipeline. Red Lake plans to begin storage and hub services by Nov. 1. An open season held by Red Lake’s affiliate, Aquila Storage, resulted in non-binding precedent agreements for more than 69% of the proposed facility’s storage capacity, Red Lake said. But so far, no customers have signed binding agreements for capacity.

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