FERC said Caledonia Energy Partners LLC's circumstances allow it to sidestep requirements to hold open seasons and solicit capacity release offers in an order allowing the company to modify its natural gas storage facility in Lowndes County, Miss.

In the June 21 order, FERC allowed Caledonia to continue to charge market-based rates for its storage services. At Caledonia's request, FERC also vacated authorizations granted in 2008 for the County Line Expansion Project. The company said it no longer intended to develop the County Line Field and integrate it with its Caledonia Field.

This appeared to be the first FERC decision after a May 2011 ruling involving Pine Prairie Energy Center LLC that did not require a storage operator to solicit permanent capacity release offers or hold an open season. In the May 2011 order authorizing Pine Prairie's Louisiana storage facility expansion, FERC clarified its policy on open seasons for storage and pipeline projects, and it required Pine Prairie to hold a new open season for the expansion capacity and to solicit permanent capacity release offers.

"Here, we are not requiring Caledonia to hold a new open season or solicit permanent capacity release offers because the concerns involved in Pine Prairie are inapplicable as Caledonia's application does not result in any new working gas capacity," FERC explained in a footnote to the Caledonia order.

In its application, Caledonia admitted it had not held an open season to determine demand for the project nor solicited offers of capacity release from current customers, as FERC required after the Pine Prairie order. Caledonia said its case was different from that of Pine Prairie - as well as a subsequent proceeding in which FERC applied the Pine Prairie policy to a Perryville Gas Storage LLC project against the operator's wishes - because those cases involved expansions of storage capacity.

The June 21 order allowed Caledonia to go forward with its Delta Pressure-DP33 Project. The company said the project will allow it to increase the maximum daily withdrawal rate of the Caledonia Storage Facility to 765,000 Mcf/d and the maximum injection rate to 717,000 Mcf/d. The project would upgrade the maximum allowable operating pressure of the facility from 2,700 pounds per square inch gauge to 3,300 psig, add new compressors and make other modifications to increase injection and withdrawal capacity. The project would include an upgrade to the meter station at the interconnect with Tennessee Gas Pipeline Co. to match the new capacity.

Caledonia operates the Caledonia Field in Lowndes and Monroe counties in Mississippi. In 2005, FERC authorized Caledonia to build and operate the Caledonia Storage Facility, which converted the depleted gas storage reservoir into a high-deliverability, multicycle facility that could store 11.7 Bcf of working gas. According to FERC documents, Caledonia is an affiliate of Enstor Operating Co. LLC, a subsidiary of Iberdrola SA. (CP12-33)

Copyright 2012 SNL Financial LC. All Rights Reserved.

(Originally published June 22, 2012, in SNL Daily Gas Report.)