FERC authorized Golden Triangle Storage Inc. to expand its natural gas storage facility in Jefferson County, Texas, but said the company will need to speed up the development schedule.
"Golden Triangle has presented evidence supporting a finding that there is a general need for additional storage capability, including in the area of its proposal," FERC said. "Based on this demonstration of potential project benefits, and the lack of adverse impacts on existing customers, other pipelines and their captive customers, landowners or communities, the commission finds, consistent with the Certificate Policy Statement and Section 7 of the [Natural Gas Act], that the public convenience and necessity requires approval of Golden Triangle's proposal."
In December 2007, FERC first issued a certificate allowing Golden Triangle, a subsidiary of AGL Resources Inc., to build and operate the Jefferson County storage facility. The facility included two high-deliverability salt dome storage caverns which provided it with a total certificated capacity of 24.48 Bcf: 16 Bcf of working gas and 8.48 Bcf of cushion gas. It had a maximum withdrawal capacity of 600 MMcf/d. Golden Triangle has placed Cavern 1 into service on an interim basis. The company is solution mining Cavern 2 and expected to put it in service in 2012.
In August 2011, Golden Triangle submitted an application requesting a certificate that would allow it to add two salt dome storage caverns to the facility. The expansion would increase total certificated capacity to 49.38 Bcf: 32.6 Bcf of working gas and 16.78 Bcf of cushion gas. The upgrade would not change the approved maximum injection and withdrawal rates. In the application, Golden Triangle expected to begin construction of Cavern 3 in the third quarter of 2012 and Cavern 4 in 2014, with in-service dates of 2015 and 2017, respectively.
During the application process, in December 2011, Golden Triangle informed FERC that AGL Resources completed a merger with Nicor Inc., which FERC observed is the parent company of Sawgrass Storage LLC, which has a storage project in the Gulf Coast production area as does Golden Triangle, as well as Central Valley Gas Storage LLC in California and Nicor Horizon LLC, which has an interest in an interstate gas pipeline in Illinois.
FERC issued a Jan. 19 order approving the expansion, subject to engineering and environmental conditions. FERC also said Golden Triangle must inform the commission if it or one of its new affiliates increases storage capacity or otherwise boosts market power.
FERC also granted Golden Triangle's request to use its current market-based rate authority for the proposed expansion.
Consistent with its general practice for storage facilities, the commission required the facilities to be put in service within three years of the order. "We note that this timeframe would accommodate Golden Triangle's contemplated schedule for Cavern 3; however, in order for Golden Triangle to complete Cavern 4 under this authorization, Golden Triangle will need to alter its development schedule," the commission said. (CP11-531)
Copyright 2012 SNL Financial LC. All Rights Reserved.
(Originally published January 26, 2012, in SNL Daily Gas Report.)