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PAA Natural Gas Storage Commences Commercial Operations on Second Cavern at Pine Prairie


PAA Natural Gas Storage, LLC (“PNGS”) today announced that it had commenced commercial operations on the second of three storage caverns at its Pine Prairie facility in Evangeline Parish, Louisiana, increasing the aggregate working gas capacity to approximately 13.8 BCF. PNGS is indirectly owned 50% by Plains All American Pipeline, L.P. (NYSE:PAA) and 50% by Vulcan Capital.

Phase I development of the Pine Prairie facility consists of three caverns with aggregate permitted capacity of 24 BCF. Cavern #1 began commercial operations in October 2008. Cavern #2 received the requisite permits in March 2009 and commenced commercial operations on April 1, 2009. Leaching operations on Cavern #3 began in December 2008, and this cavern is expected to commence commercial operations during the second quarter of 2010.

“Commencing commercial operations on Cavern #2 is a significant milestone in the development of Pine Prairie,” said Dean Liollio, President of PNGS. “Our ability to bring this capacity online on the schedule contracted with our customers is a notable achievement as it enables our customers to meet their storage requirements and delivery obligations in a timely manner.” Since the facility began operations in October 2008, activity levels have steadily increased to an average throughput across the facility of approximately 325 MMCF per day during March 2009.

“Pine Prairie is strategically located and well positioned to provide our customers with superior access to major U.S. natural gas markets and we look forward to the completion of Phase I in early 2010,” continued Liollio. “We have recently filed to expand the permitted capacity of the facility to 48 BCF and currently envision embarking on a Phase II expansion of the facility once the permit is approved. As PAA has done historically in its crude oil storage business, we invested significant capital to oversize the infrastructure at Pine Prairie to readily accommodate future expansion, including the leaching, pipeline and gas handling systems. We believe these upfront investments will facilitate our ability to quickly and cost-effectively expand the facility as market conditions warrant, which we believe provides us with a competitive advantage over other facilities. Our expansion capability, as well as connectivity to eight major interstate natural gas pipelines serving major U.S. consuming areas, positions Pine Prairie to become a key market hub for natural gas storage activities.” Liollio noted that, in addition to the organic expansion potential of Pine Prairie, PNGS intends to continue to evaluate acquisition opportunities and greenfield development projects.


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