First Salt Cavern Storage Facility For Western U.S.

April 2011 Vol. 238 No. 4

Magnum Gas Storage LLC has accepted the FERC certificate of public convenience and necessity authorizing construction and operation of a high-performance natural gas storage facility in central Utah.

The facility marks an important first step in Magnum’s plan to develop an integrated gas/electric energy hub that will add reliability and efficiency to existing regional infrastructure and enable development of intermittent, renewable power generation throughout the Rockies. With excellent access to both the natural gas and electric grids in the West, the Magnum project is located in Millard County, north of Delta, directly adjacent to the 1800-megawatt Intermountain Power Project.

The FERC 7(c) permit authorizes Magnum to construct a facility containing up to 40 Bcf of working natural gas, providing customers with up to 12-turn service. This makes the project the first large-scale, high-deliverability, “gulf style,” multi-turn salt cavern storage facility in the Western United States. The size of the Magnum-controlled salt deposit provides opportunities for significant future expansion.

Magnum also recently received a Right-of-Way Grant from the Bureau of Land Management that allows the Company to build a header from its site in Delta to Goshen, Utah, as well as an Underground Injection Control permit from the State of Utah to drill its cavern wells. Magnum’s header system will provide storage customers with direct access to the Kern River and Questar pipelines. Magnum’s customers will have access through backhaul and displacement arrangements to the Opal trading hub, which will provide access to the Northwest, CIG, Overthrust and Ruby pipelines.

Magnum is currently finalizing precedent agreements for firm storage capacity, which will be followed by a $350 million project financing. Commercial operations are expected in 2013.