Gas-storage facilities, often with little fanfare or recognition, support daily and seasonal oil and natural gas market activities by providing an array of services to gas utilities, electric generators, end-users, producers and gas marketers. The Rocky Mountain region’s hydrocarbon developments and major internal and external pipeline developments have matured, defining much of the region’s future energy developments. As a result, gas-storage operations and developments are receiving their share of investment dollars.

This overview of western gas storage includes a combination of storage facilities. Some of them support long-haul pipelines. Others provide winter peak-day service. And still others are focused on balancing contracted transportation services. Most perform a variety of services.

Texas, New Mexico

For many years, long-haul pipelines from the Permian Basin in Texas and New Mexico provided essential baseload gas services to Arizona and California markets. As Permian Basin supply declined, San Juan Basin gas filled-in effectively.

With Canadian gas available into northern California via the GTN Northwest Pipeline (and the later implementation of the Kern River Pipeline system from the Rockies), California found that it had numerous supply options available from a variety of major producing basins.

Most recently, a general decline of San Juan gas production and Canadian gas imports has been augmented with the Ruby Pipeline, which provides additional Rocky Mountain natural gas into northern California and northern Nevada markets.

Storage facilities in the Permian Basin region have historically offered their capabilities and contract services in support of these western market needs. For many years El Paso Natural Gas Transmission used its Washington Ranch gas-storage field, with 68 billion cubic feet (Bcf) of capacity in New Mexico, to support daily operations on the El Paso Corp. pipeline system. Historically, although no commercial services have been directly offered to customers from the facility, all shippers on the system have benefitted from the flexibility that this storage has brought to the pipeline system as a whole.

Over the years, El Paso held discussions with its customers regarding an expansion of this Washington Ranch facility. Most recently, it has considered adding some 10 Bcf of additional working gas capacity and additional injection and withdrawal capability. However, this expansion awaits market support.

Meanwhile, with a recent capacity expansion, Enstor Inc. ‘s Grama Ridge storage facility in Lea County, New Mexico, offers 13.7 Bcf of working gas capability with 100 million cubic feet (MMcf) per day injection and 180 MMcf per day withdrawal capability. This facility connects with the El Paso pipeline, with NGPL and with DCP Midstream’s Raptor intrastate pipeline. Also, Enstor is in the process of implementing a gas-storage facility at the Waha, Texas, trading hub. At completion, this 10 Bcf high-deliverability facility would provide 450 MMcf per day injection and 800 MMcf per day withdrawal capability into pipelines at the Waha Hub.

Phase 1 of this Waha Storage Hub facility is expected to be available in fourth-quarter 2012 with service from two caverns and a capability of 2 Bcf.

Other storage facilities in the Permian Basin providing services to El Paso and Transwestern Pipeline include Chevron Pipeline Co.’s Keystone Gas Storage facility near Midland, Texas, and OneOk Inc.’s Texas Gas Storage facility near Loop, Texas.

Chevron’s Keystone facility is a salt cavern that provides 4.9 Bcf of working-gas storage with a maximum deliverability of 400 MMcf per day into El Paso Pipeline, Transwestern Pipeline, or Northern Natural Gas pipeline.

OneOk Texas’ Loop storage facility in Gaines County, Texas, is connected to OneOk’s Westex Gas Transmission system. The storage facility offers 4 Bcf of working gas capability and delivery can be arranged to numerous interstate or intrastate pipelines via contracts on the WesTex pipeline system.

Colorado

Moving westward to the Rockies, the Federal Energy Regulatory Commission (FERC) has certificated eight storage facilities in the Rockies and Midcontinent region since 2000. Numerous others remain in process.

These projects have increased regional capacity and deliverability by over 15%. However, FERC approval hasn’t always resulted in a completed project, and ever-evolving market conditions have caused some developers to request extensions of their development period or, in some cases, elect to halt their project.

One such example is NGS Energy LP’s Windy Hill gas-storage facility in Morgan County, Colorado, where development is temporarily halted and FERC has extended its authorized completion time to May 2013.

Performing utility services, Source Gas Energy Services Co.’s Wolf Creek gas-storage facility in Pitkin County has a capacity of 2.2 Bcf. Similarly, Public Service Co. of Colorado operates utility gas storage for its customers, consisting of the Roundup field in Morgan County, Colorado, (6 Bcf) and the Fruita field in Mesa County (0.25 Bcf).

In contrast, in the Logan County area, is one of the region’s newest independent storage developments—Merchant Energy Partners’ East Cheyenne gas-storage facility, which is nearly completed. Pad-gas injections have begun, and first withdrawal capabilities are scheduled for first-quarter 2012. This facility connects directly to the Trailblazer Pipeline. A future connection is proposed to the Rockies Express Pipeline. Initial capabilities are for 11.5 Bcf. Total certificated capacity is 18.9 Bcf.

Another recent FERC certification is Energy Corp. of America’s Leader One gas-storage facility in Adams County. Leader One has accepted its FERC certificate to construct up to 11 Bcf of working gas capability with 150 MMcf per day injection and 250 MMcf per day withdrawal capability, and proposes dual interconnections to the existing area Colorado Interstate Pipeline. Leader One’s anticipated completion is third-quarter 2013.

Colorado Interstate Gas Co. (CIG) has integrated a number of gas-storage facilities in the Colorado and Kansas-border area with its pipeline operations and obligations. Owning and operating several of these facilities in a pooled manner, CIG’s Boehm (5.2 Bcf), Flank (7.2 Bcf), Ft. Morgan (8.5 Bcf) and Latigo (8.1 Bcf) storage facilities provide 29 Bcf total capacity of working gas. When combined with its 6 Bcf share from the Young gas-storage plant, total injection and withdrawal capabilities are 295 MMcf per day and 877 MMcf per day, respectively.

These pooled storage facilities allow CIG to perform a bundled no-notice transportation service in addition to its traditional unbundled storage and transportation services. As previously stated, CIG also shares 50% ownership of the 12 Bcf Young Gas-storage field in Morgan County, performing firm storage services for its customers and providing delivery services to co-owner Public Service Co. of Colorado.

In another recent joint-venture project in Adams County, CIG is 50% owner and operator of the Totem Gas Storage facility, from which it operates a separately-tariffed firm storage service with a working-gas capacity of 7 Bcf and injection and withdrawal capabilities of 100 MMcf per day each.

Utah

Moving across the Front Range and into the interior areas of Colorado, Wyoming and Utah, only a limited number of gas-storage facilities are available to support significant Rocky Mountain gas production and development activity.

The largest facility is Utah’s Clay Basin gas-storage facility in the northeast corner of Utah and near the Wyoming and Colorado borders. Clay Basin’s working-gas capacity is 51.25 Bcf. The facility is owned and operated by Questar Pipeline Co.

As a customer, Williams’ Northwest Pipeline Co. contracts for 3.25 Bcf of capacity at Clay Basin that it uses for balancing system operations. One of Northwest Pipeline’s major customers—Puget Sound Energy—contracts some 12.9 Bcf. Questar Gas, serving the greater Salt Lake City area, is the largest contracting party at the facility with some 15.4 Bcf.

After receiving approval to expand Clay Basin by 2.7 Bcf and retain that new capacity to support their own recently expanded pipeline operations, Questar Gas has proposed an 8 Bcf expansion of the Clay Basin facility, which could be available to customers as early as 2013. Results of the non-binding open-season for that project are yet to be announced.

Interestingly, Questar indicated that, concurrent with such expansion, they propose to connect the Clay Basin facility directly to the similarly expanded and now bi-directional Overthrust Pipeline as well as to other Kanda, Wyoming, area pipelines. Although the storage expansion quantity isn’t significant and there is some question about its firm-service priority, the expanded connectivity of the historically constrained Clay Basin facility could be an attractive component.

Questar Pipeline also operates three additional small gas-storage fields proximate to Salt Lake City, Utah. They are the Chalk Creek facility in Summit County (0.25 Bcf), the Coalville facility also in Summit County (0.69 Bcf) and the Leroy facility in Uinta County (0.84 Bcf).

These facilities are aquifer-type storage facilities. Thus, they are generally filled very -late in the injection season and are used only in the winter season to support winter-peaking operations for Questar Gas, which is the Salt Lake City area gas utility.

Another proposed Utah development—the Magnum Gas Storage (MGS) facility—received FERC authorization to proceed with its planned construction. During several years and in several phases, MGS will build four solution-mined salt caverns capable of providing up to 40 Bcf of multi-turn gas-storage service. To support the facilities, pipeline connections are proposed to the Kern River and Questar pipelines near Goshen, Utah.

MGS hopes to begin initial commercial operations with 21 Bcf capacities from two salt caverns and 360MMcf per day of injection and 620 MMcf per day withdrawal capability in 2013.

Wyoming

Clear Creek Gas Storage LLC, a subsidiary of QEP Resources Inc., owns and operates the well-established 4 Bcf Clear Creek gas-storage facility in Wyoming. Its sole customer is QEP Marketing Co., also a subsidiary of QEP Resources. Injection capability is 35 MMcf per day with withdrawal capability of 50 MMcf per day.

One of the area’s newest entrants is the FERC-certificated Ryckman Creek gas-storage facility, which is just entering its construction phase. Peregrine Midstream Partners LLC is developing; the proposed facility in Uinta County, Wyoming, some 25 miles south of the Opal Hub.

The Ryckman Creek facility will use a partially-depleted oil and gas reservoir to provide up to 35 Bcf of gas storage capability. Phase1 injection and withdrawal capabilities will be up to 200MMcf per day injection and up to 360 MMcf per day withdrawal.

Proposed pipeline interconnections will be to Questar, Kern River, Northwest, Overthrust, and possibly Ruby Pipeline. The facility managers plan to provide 18 Bcf of interim service by second-quarter 2012, with fully-contracted service capabilities by second-quarter 2013.

In the Casper, Wyoming area, Source Gas, the local gas utility, operates three area gas-storage fields to support its regional customers’ peak and seasonal loads. These facilities are included in utility rate base and, currently, no commercial services are offered to others.

The facilities include Carbon County’s Oil Springs storage field (12.1 Bcf), the Bunker Hill storage field (1.5 Bcf) also in Carbon County, and the Kirk Ranch field in Fremont County (0.6 Bcf). A proposal by Enstor to purchase and to significantly expand the Oil Springs storage field’s capabilities and convert it to a FERC interstate jurisdictional facility, while still providing a long-term local utility storage service, has encountered state legal and regulatory issues.

Looking northwestward to Washington and Oregon, two gas-storage facilities are operating. First, the Jackson Prairie gas-storage facility, jointly-owned by Salt Lake City-based Williams’ Northwest Pipeline and Spokane-based Avista Utilities Corp., and operated by Seattle-based co-owner, Puget Sound Energy, provides about 25Bcf of working gas capacity.

This aquifer gas-storage field in Lewis County, Washington, near Chehalis, is connected to Northwest Pipeline and, has injection capability of 600 MMcf per day and maximum withdrawal capability of 1,150 MMcf per day. Because the field is an aquifer, summer injections are often weighted towards the end of the injection season to assure proper aquifer performance.

Northwest Pipeline uses its portion of the capacity to provide tariffed firm and interruptible storage services for its customers. Avista Utilities and Puget Sound Energy use their portion to provide services specifically to their customers via transportation services provided by Northwest.

To the south, in Oregon, Northwest Natural Gas Co. (NWNG) receives local gas production from fields near Mist, Oregon, and has created a gas-storage field in two of the larger depleted reservoirs. The Mist gas-storage facility, built some 60 miles northwest of Portland, provides peaking and seasonal services to NWNG customers (utility business) and also provides some services to third parties via interconnections with Northwest Pipeline (non-utility business). Mist’s utility business can store some 9 Bcf and, with a recent expansion, the non-utility portion provides up to 10.5 Bcf.

Some contract provisions allow NWNG to recall a portion of the non-utility capacity if that is required by the utility’s growth. If this occurs, a possible expansion of the non-utility portion is an option.

Northern California

In California, a number of gas-storage fields in the north and south are owned and operated either by local utilities Pacific Gas & Electric (PG&E) or Southern California Gas Co. (SoCal Gas), or they may have been developed by independent storage operators.

PG&E operates three gas-storage fields in northern California with a total capacity of 100.3 Bcf, but about 60 Bcf is non-cyclable working gas. About 42 Bcf of that quantity is fully-cyclable in each season.

As early as 1997, PG&E’s Gas Accord provided the first regulatory opportunity—an unbundling of various services on the PG&E system for non-core customers. This allowed independent storage operators the ability to develop a number of natural gas-storage facilities attached to the California Gas Transmission (CGT) system, PG&E’s intrastate pipeline affiliate.

PG&E maintains required facilities to serve its core (commercial and residential) customers. These independent storage facilities also provide a variety of storage services and transportation balancing services. Table 1 lists these northern California facilities and their technical capabilities. The company’s 2011 rate determination includes an allocation of resources from PG&E’s Gill Ranch capacity.

*With about 60 Bcf of non-cyclable working gas, PG&E’s storage facilities are limited in cycling their maximum storage quantity, whether by existing design configurations, pipeline locations, or both.

**PG&E’s 2011 rate determination includes an allocation of resources from PG&E’s Gill Ranch capacity.

Southern California

SoCal Gas owns and operates four storage fields in southern California with a total capacity of 134 Bcf, with 81 Bcf currently allocated to support core residential, small industrial and commercial customers. About 4 Bcf is used by the pipeline for operational purposes. The remaining 49 Bcf is available for contracting by other parties on the system.

In a recent initiative, SoCal Gas received regulatory approval to expand these gas-storage capabilities by removing additional native gas and oil from certain reservoirs over time. This gas and oil will be sold and proceeds will be split between ratepayers and SoCal Gas via an agreed regulatory formula. According to the company, SoCal Gas and its customers will benefit from this increasing gas-storage capability in future years.

Recently, in the Bakersfield area, the Tricor Ten Section Storage project received FERC approval and has begun construction of their facility. This will be the first independent storage facility developed in southern California.

Initial pipeline connections will link it with interstate pipelines Kern River Pipeline and the Mohave Pipeline, with later connections to the PG&E and SoCal intrastate systems. Table 2 lists these southern California facilities and their technical capabilities.

Many are often surprised at the number of various storage facilities and the number of storage operators and developers which are actively supporting natural gas operations in the western states. Storage growth is providing added flexibility and commercial optionality to the region, both on the supply side and on the market side. With an established, long-term resource base for supply, natural gas storage is the third leg of the stool for Rocky Mountain midstream infrastructure and plays an increasingly important role in the area.