NGS Energy Nears Completion on First Grassroot Natural Gas Storage Facility and Plans Two More

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Researched by Industrial Info Resources (Sugar Land, Texas)--NGS Energy Fund LLC (Westport, Connecticut) is proceeding with plans to construct 86.4 billion cubic feet (Bcf) of underground natural gas storage. The company plans to build three underground storage facilities: one near Markham, Texas (Tres Palacios), one near Brush, Colorado (Windy Hill), and the third near Taylorsville, Mississippi (Leaf River).

The company is nearing completion of its Tres Palacios natural gas storage facility on the Markham Dome in Matagorda and Wharton Counties in Texas. Construction began in late 2007, and the facility is expected to begin operation late this summer. Last week, the company announced that it had successfully completed Mechanical Integrity Testing on the first of three natural gas storage caverns. The test is a significant step for the project and is the penultimate step before placing the cavern into operation. The final step requires authorization from the Federal Energy Regulatory Commission (FERC) to place facilities in service. Tres Palacios expects to receive FERC approval by the end of July. Once the authorization from FERC is received, it will allow Tres Palacios to begin cavern dewatering immediately and commence firm storage operations on September 1.

The facility will consist of three underground salt caverns and a gas-handling facility, which will include a 48,000-horsepower compressor station, dehydration equipment and other associated infrastructure required to support the direction and routing of gas to and from the storage caverns. The caverns will have a working gas capacity of 35.6 Bcf with a maximum daily withdrawal rate of 2.5 Bcf and a maximum daily injection rate of 1 Bcf. The compressor station will contain 10 Caterpillar engines of 3616 horsepower and 4,800 horsepower with Ariel JGZ/6 reciprocating gas compressors. Houston-based Atlas Engineering Incorporated handled the design and engineering of the natural gas storage and compression facilities. The Tulsa office of Calgary-based Flint Energy Services Limited handled the construction of the surface facilities. The caverns had been previously solution mined by Houston-based Texas Brine Company LLC. Wharton County Electric Cooperative also built a 6,000-kilowatt substation at the site.

The storage facility will have use of substantial pipeline header flexibility allowing interconnections to multiple pipeline systems. The Tres Palacios facilities also will have two segments of looped bi-directional pipeline totaling 41.72 miles initially connecting to 10 interstate and intrastate pipeline systems. The pipeline is permitted to connect to up to 13 systems. The North Pipeline Corridor is composed of 30.98 miles of 24-inch-diameter pipeline. It is broken up into a 30.33 mile dual pipe and a shorter 0.65-mile single pipe. The North Pipeline Corridor will connect the storage facility with nine pipeline systems. The South Pipeline Corridor consists of 10.74 miles of 24-inch-diameter pipeline. The South Pipeline Corridor is also divided into two segments, 6.38 miles of dual pipe and 4.36 miles of single pipeline. This will connect the storage facility to two pipeline systems. Irving, Texas-based Driver Pipeline Company Incorporated is handling the construction of the pipeline and meter and regulation stations.

NGS also plans to construct the 16-Bcf underground salt dome Leaf River natural gas storage facility in Smith County, Mississippi, and the 18-Bcf Windy Hill natural gas storage facility in Morgan County, Colorado. Leaf River is tentatively scheduled to begin construction in late 2008 or early 2009 and be in service by early 2010. The Leaf River site will connect to five regional natural gas pipeline systems through 47 miles of 36-inch-diameter pipeline. Windy Hill will connect to four natural gas pipeline systems through its proposed 24-inch-diameter pipeline. Windy Hill is slated to begin construction in mid-2009. The facility is planned to be in service in mid-2011. Windy Hill will utilize multiple bedded salt formations which will be brought online in 3 Bcf-4 Bcf increments up to 32 Bcf.

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