SG Resources Gets More Time to Build MS Storage Project

FERC on Wednesday granted SG Resources Mississippi LLC (SGRM) a nearly two-year extension of the deadline to complete the Southern Pines Energy Center, a 12 Bcf high-performance salt dome storage project, in Greene County, MS.

The project, which the Commission approved in October 2002, was due to be completed by no later than Oct. 10, 2005, but the agency has now given it until July 31, 2007 to finish and place into service the proposed storage facility.

"SGRM states that the extension is necessary due to market uncertainties, a continuing reluctance of would-be customers to execute service agreements and temporal restrictions associated with protection of threatened gopher tortoises," according to the letter order issued by FERC's Office of Energy Projects (CP02-229).

In seeking the delay, the company specifically cited the changing roster of prospective liquefied natural gas projects along the Gulf Coast, the unsettled state of ownership of several interstate gas pipelines operating in the Gulf Coast region, the still-uncertain financial terms for the storage project and the federal government's requirement that it relocate all threatened gopher tortoises.

"SGRM remains committed, however, to proceeding with the project and is optimistic that construction can begin by June 1, 2005, which would provide time for completion of the project by July 2007," the company told FERC in its Dec. 1 request for the delay.

The project earlier had been marred by problems associated with the struggling merchant energy business. By the time it had received its FERC certificate in 2002, all of the merchant energy companies that had signed up for capacity in the proposed project were closing up shop, scaling back operations and beginning to sell off assets, Mark Cook, a principal of SGRM, told NGI in April (see Daily GPI, April 23).

"When it was originally filed to be permitted, almost all of the respondents -- there was 12 Bcf offered and 36 Bcf was bid on -- were merchants. All those people went away, and then we had to go back and re-establish the market and find the utilities that had been served by the merchants...We kind of started from scratch. It was a long process," he said.

The proposed storage facility is to consist of two underground caverns, with a combined working gas capacity of 12 Bcf, deliverability rate of 1.2 Bcf/d and maximum injection capacity of 600 MMcf/d. SGRM noted that the 80-acre site would be able to accommodate three additional caverns to support future growth in demand.

SGRM said the Southern Pines facility initially would have a bi-directional interconnect with Destin Pipeline, which provides direct access to Southern Natural Gas, Tennessee Gas Pipeline, Florida Gas Transmission, Gulfstream and Gulf South Pipeline systems.

(Copyright 2004 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.
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