29-Jan-10 8:00 AM CST

January 29, 2010 Open Season to Begin Monday for Large Arizona Storage Project

Arizona Natural Gas Storage, a subsidiary of NGS Energy, said it will launch a non-binding open season beginning February 1 for firm storage service at a proposed salt-cavern facility to be developed some 35 miles south of Phoenix.

The ANGS project, to be sited in the Picacho Basin in Pinal County, would house up to eight salt caverns with a maximum 20 Bcf of working capacity, with market-based rates. The company said the Federal Energy Regulatory Commission accepted its pre-filing application last month; the facility is expected to come online in the summer of 2012.

The project would include a 9.5-mile lateral connecting it to El Paso Natural Gas and Transwestern Pipeline, as well as connections to existing and proposed power plants in Pinal County, ANGS said.

The project was first proposed by El Paso in 2006 (GD 6/22/06). But an official with utility Arizona Public Service told the Arizona Corporation Commission last year that the project was shelved after an unsuccessful open season in which it was the only bidder (GD 4/6).

ANGS announced last spring that it had signed agreements with El Paso regarding the project (GD 5/13).

A bill that would have exempted brine-injection wells related to the creation of gas storage projects from certain groundwater protection requirements failed in the state legislature last year (GD 4/6). The industry has been trying to encourage the development of an in-state gas storage project for years. If ANGS builds its project, it will be the first for Arizona.

In its letter to FERC last month, ANGS noted that the site is situated on private land owned by El Paso — land which ANGS has an option to purchase — as well as Arizona State Trust land that it proposes to lease. The proposal would include the construction of some 350 acres of brine ponds, ANGS told FERC.

The company said the project is needed to support growing demand in Arizona and potentially California, particularly as more renewable power sources come online.

Recent requirements to increase the use of renewable power “will create a need for natural gas to balance the intermittent renewable inputs, creating greater volatility,” said Laura Luce, president of ANGS.

The open season extends through February 25. More information is available from Patrice Thurston at 203-557-1000, or at www.ngsenergy.com. — Stephanie Seay

Disclaimer: Reprinted with the Permission of Platt’s