One month after getting the regulatory green light on its Lodigas storage project in Northern California, Western Hub PropertiesLLC said it is about to announce another high-deliverabilitystorage project in Bakersfield, CA, near Wheeler Ridge, and ismoving forward on a storage facility in Live Oak and KarnesCounties, TX, near San Antonio.
“We are aggressively pursuing storage projects throughout thecountry,” said spokesman Jim Fossum. “We have three [projects] thatare in the developmental stages, one other that’s hopefully aboutto reach that level and several others that are in the duediligence study phase. The Lodi project should be on line nextspring. The [Texas] project should be on line next spring as well,and the next project (in southern California) should be about ninemonths behind that.”
The rights to the Texas facility were purchased from AtkinsonGas Storage, which had been planning to develop the project forseveral years. Through a subsidiary, CenTex Market Center LP,Western Hub will convert the Atkinson field, a depleted gasreservoir, into high-deliverability, multi-cycle gas storage. Thefacility’s initial phase will have a working gas capacity of 12 Bcfwith an injection capability of 450 MMcf/d and a withdrawalcapability of 250 MMcf/d. The field potentially could be expandedto about 30 Bcf of working gas capacity. Service is expected tobegin in May 2001.
The project will be used to serve the growing gas-fired powergeneration market in South Texas as well as rapid residential,commercial and industrial growth in the region. “The CenTex projectis ideally situated to provide market area storage services to thegrowing San Antonio/Austin corridor,” said Tom Dill, president ofWestern Hub. “The additional gas-fired generation being built inthis area, combined with the projected increase in volatility ofgas and electricity prices, demands high-deliverability natural gasstorage.”
CenTex anticipates being directly connected to City PublicService of San Antonio’s city gate as well as the intrastate gridvia Houston Pipe Line and PG&E Gas Transmission, Texas (whichis being sold to El Paso Energy).
Kevin O’Toole, vice president of hub services for Western Hub,noted that there are no gas storage facilities in Central or SouthTexas. There are some around the Houston area. “We thought thiswould be a good growth area for us,” he said. “There’s quite a bitof power generation going in. Panda [Energy] has a project aroundAustin. Calpine has some up there. The City of San Antonio justbrought on line a 500 MW unit. And there have been several otherrecent announcements. We feel like there will be pretty good demandfor high-deliverability storage in this area.”
The CenTex project should move forward rapidly, he added. “Theproject was pretty well packaged. [Atkinson Gas Storage], whichheld all the permits, had been looking at developing a storagefield down there for quite some time and had a lot of the leasesand permits. We have a lot fewer hurdles to overcome than on otherrecent projects.” The project already has a storage permit from theTexas Railroad Commission.
Western Hub also announced that its Lodi Gas Storage Project, whichis under development in northern California, received certificationfrom the California Public Utilities Commission in late May (see DailyGPI, May 19). The project will offer 9Bcf of capacity, 300 MMcf/d of injection and withdrawal capability,with receipt and delivery points on Pacific Gas & Electric’spipeline system.
Meanwhile, in the next week or two, the company will announce amerchant storage project in the Wheeler Ridge area in closeproximity to each of the four major gas pipelines in the state andto several proposed gas-fired merchant power plants — one ofthem, PG&E Corp.’s La Paloma plant, which began constructionMay 17, will be the state’s largest merchant plant (1,048 MW).
Western Hub is focused on providing flexible gas storageservices to the emerging independent power generation industry.”High deliverability storage is a surrogate to long-haul pipelinecapacity,” said O’Toole. “Based on the environmental and landownerissues, the expansion or new construction of long-haul pipelinecapacity can to a great degree be replaced by a high-deliverabilitystorage field in a market area.” O’Toole said Western Hub has itssights on projects in many other regions, including the PacificNorthwest and the Northeast.
Western Hub is owned by Haddington Energy Partners andHaddington/Chase Energy Partners, whose general and limitedpartners consist of Haddington Ventures, Chase Capital Partners,Travelers Insurance, Prudential Insurance, and Indiana Energy.
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