The Future of Natural Gas Storage is Here, as Dominion Announces Storage Factory Project
* Combines new salt-cavern storage with depleted reservoir storage
* Adds up to 50 Bcf to Dominion’s storage capacity
* Will eventually result in 75-100 new jobs
RICHMOND, Va. – Dominion (NYSE: D) Tuesday announced the Storage Factory Project, which would expand its natural gas storage capacity by up to 50 billion cubic feet (Bcf).
The Storage Factory Project would integrate the high deliverability of storage in salt formations with the large capacity of depleted reservoir storage. The result is an efficient, reliable operation that will bring competitive and flexible gas storage services to customers in the Northeast and Mid-Atlantic market areas.
The first phase will add 11.2 Bcf of new natural gas storage. Initial construction is scheduled for 2009, when work will begin on two salt caverns to be added to the existing fleet of depleted reservoirs. The salt caverns will be in Tioga County, Pennsylvania.
“The future of natural gas storage is here,” said Thomas F. Farrell II, chairman, president and chief executive officer of Dominion. “The blending of capacity from traditional depleted reservoir storage and deliverability from salt caverns represents an exciting growth opportunity for Dominion’s storage assets. Salt cavern storage is common in the producing area, but we are building this infrastructure close to the market area, where its advantages – high-deliverability, flexibility and expandability – will bring needed supplies to the market quickly, especially during peak weather conditions.”
Dominion will leach salt out of deep, underground formations to form caverns where gas can be stored at pressures typically higher than the depleted natural gas storage fields common in the Northeast market area. Gas can be repeatedly injected and withdrawn from the caverns, bringing great flexibility to the system in the winter. The salt cavern storage will be coupled with additional, lower-deliverability storage facilities to provide a flexible, reliable mix of gas storage service offerings.
Dominion will conduct an open season for the project beginning at 8 a.m. EDT June 18 and concluding at 5 p.m. EDT July 17. The project is subject to approval by the Federal Energy Regulatory Commission. The anticipated in-service date for the first two caverns is 2014.
“The demand for clean, natural gas is growing throughout the Northeast and the Mid-Atlantic,” said Paul Koonce, chief executive officer of Dominion Energy. “We are calling it the Storage Factory Project because we can construct new storage facilities as the demand for natural gas grows.”
The plans calls for a compressor station for injection and withdrawal, as well as pipelines needed to get the natural gas to market. Dominion expects the project will create 75-100 full-time positions in north central Pennsylvania, with an additional 200 construction jobs during the first two years. Depending on how many caverns are constructed, the project would cost between $500 million and $700 million.
“The nation needs new sources of natural gas, both for the energy it provides and its environmental qualities,” said U.S. Rep. John E. Peterson, who represents the Fifth District of Pennsylvania. “As we develop those sources, natural gas storage becomes increasingly important. The Storage Factory Project can provide the storage we need for the future.”
“Pennsylvania has historically been a keystone state for storing and delivering natural gas throughout the Northeast and Mid-Atlantic regions,” said Pennsylvania State Senate President Pro Tempore Joe Scarnati, who represents the 25th State Senatorial District. “The Storage Factory Project enhances the state’s role in natural gas storage and brings needed jobs to the Tioga County area.”
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