Wednesday, May 13, 2009

Deal for El Paso's natural gas storage assets in Picacho basin

NGS Energy announced today that they El Paso Corporation "have signed a Memorandum of Acquisition and Understanding with regard to El Paso's Pinal County, Arizona natural gas storage asset. Under the agreement, NGS Energy has an exclusive due diligence period and right to purchase all acreage, wells, geological and technical data and rights currently held by El Paso. The storage project is in the Picacho Basin and would include a 9 mile header system that could connect to Transwestern Pipeline, El Paso Natural Gas Pipeline, as well as numerous new and proposed gas fired plants."

The company estimates the current acreage position could result in a 20 Bcf (billion cubic feet) storage facility and will utilize above ground evaporation ponds. They state that FERC filings will occur this summer with operations slated for Summer 2012. El Paso has been exploring the potential to dissolve chambers in the thick salt beds in the Picacho basin and pump in natural gas under pressure until it was needed [right, salt cavern storage model. Credit, US DOE]

Legislation is under consideration in the Arizona Legislature (HB2352/SB1236) that would exempt natural gas storage operations from state rules that preclude the underground disposal of brines dissolved in the formation of salt caverns. However, if NGS uses surface evaporation ponds, there will be no need for underground brine disposal.

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