In another indication of renewed interest in natural gas storage capacity, Mississippi’s Leaf River Energy Center is seeking to modify its facility to maximize injections and withdrawals in response to customer requests for greater flexibility.
NJR Midstream’s Leaf River, the third largest underground salt cavern in the Gulf Coast region, filed a proposal with FERC last month to add a booster station. The addition would enable the facility’s original 32.2 million Dth design to be realized without adding more capacity or proposing any changes to the current parameters.
Specifically, the new booster station would provide additional firm receipt capability for injecting gas from an existing interconnection with Transcontinental Gas Pipe Line Co. It also would add more firm delivery capability for incremental withdrawals into the Southern Natural Gas Co. system. In addition, the project would provide increased pressure and operational efficiencies on the 40-mile, dual 24-inch diameter pipeline header system.
“Management has been clear that we are open to organic growth opportunities for our operated storage and transportation assets whenever they would make sense for our company to pursue,” NJR Midstream spokesman Kevin Roberts told NGI.
NJR purchased Leaf River from Macquarie Infrastructure Partners in 2019 for $367.5 million. The facility, which came online between 2011 and 2014, consists of three salt caverns. It has interconnections with seven natural gas pipelines.
Following an open season last fall, Leaf River executed two precedent agreements for a combined total of 10.5 million Dth of existing storage capacity to support the capital investment. In its filing at the Federal Energy Regulatory Commission, Leaf River indicated it would not be able to meet the requirements in its precedent agreements without Commission approval.
Construction is expected to begin in August, with a targeted in-service of August 2024.
Storage Expansions
With long-term demand growth forecast for the Gulf Coast, in particular to serve LNG export terminals, Leaf River’s optimization project is one in a wave of storage enhancements by midstream companies.
Kinder Morgan Inc. last month said it would add 6 Bcf-plus the working gas capacity at the Markham Storage facility on the Texas coast. Like Leaf River, the Markham facility consists of salt dome caverns. Kinder plans to lease an additional cavern at the site in Matagorda County.
Enbridge Inc. also is seeking to add about 6.5 Bcf of working gas capacity and 3.5 Bcf of base gas to the Tres Palacios storage facility in Matagorda County on the Texas coast.
NGI’s Patrick Rau, director of Strategy & Research, said the high deliverability of salt dome storage is well suited for activities requiring quick response times, including gas-fired electric generation, trading activity and liquefied natural gas exports.
In a May episode of NGI’s Hub & Flow podcast, Rau noted that industry pundits estimate that 90% of incremental natural gas demand in the United States through the end of the decade would be centered in Texas and Louisiana.
However, the Gulf Coast is not the only area where storage assets have grown more valuable.
Spire Energy Inc. is in the process of boosting its storage capacity at the Spire Storage facility in Wyoming in response to growing renewable electric generation and the need for more balancing mechanisms. Spire executives said the boom in renewables for electric generation in the West has resulted in a change in consumption patterns for natural gas. More gas is needed to serve as a backstop for renewable generation.
Spire earlier this year also purchased Salt Plains Storage LLC in Oklahoma in order to diversify its asset base.
This year, in particular, the need for more balancing in the gas market has been on full display.
The Energy Information Administration (EIA) on Monday said with natural gas production outpacing demand, net injections into storage have exceeded the five-year (2018-2022) average by 6%, or 66 Bcf. With more than three months remaining in the traditional injection season, working gas in storage reached 69% of capacity as of July 7.
Gas stocks have been at a surplus to the five-year average since January, according to EIA. The surplus reached a high in March and has remained above average since the start of the refill season in April. However, the agency expects injections to slow for the remainder of summer. In its Short-Term Energy Outlook, EIA said relatively flat production and increased natural gas consumption in the power sector could curb builds.
“Nevertheless, we expect working natural gas inventories to remain above the five-year average for the rest of the year,” EIA analyst Jose Villar said.
