TWO U.S. UNDERGROUND GAS STORAGE SITES DUE

Projects to provide underground gas storage services at two new U.S. sites are in progress.

One is targeted for Washington County of Southwest Alabama, the other in Steuben County of western New York.

Also, two other deals under way at existing U.S. underground storage sites in Texas and Utah will increase gas storage service.

Here's what's happening:

Mobile Gas Services Corp., Mobile, Ala., signed a letter of intent with Olin Corp.'s basic chemical division to develop an underground cavern on Olin acreage outside McIntosh, Ala.
Steuben Gas Storage Co., Canisteo, N.Y., started development of an underground storage site near there.
Moss Bluff Gas Storage Systems, Houston, signed a definitive long term gas agreement to provide gas storage service to Channel Industries Gas Co., an affiliate of Tenngasco Corp., at the Moss Bluff salt dome storage site in Liberty County, Tex.
Questar Pipeline Co., Salt Lake City, Utah, last month accepted an open access blanket certificate from the Federal Energy Regulatory Commission to provide gas storage service at its Clay Basin storage field in Daggett County, Northeast Utah.

ALABAMA PROJECT

The Alabama salt dome storage project, reported by Mobile Gas to be the first one in the state, includes related surface facilities and improvements representing an outlay of about $30 million by Mobile Gas.

In addition to the initial 16.8 bcf cavern, Mobile Gas will have an option to develop a second cavern of undisclosed size.

The letter of intent provides for payments by Mobile Gas to Olin for salt disposal and leasehold and service fees and grants Olin a minority ownership. The two are considering granting Olin an additional minority interest as well.

The ability to store gas will enable Mobile Gas to take further advantage of Mobile Bay reserves, the company said. Its site is to be operational during the latter part of 1993.

The letter of intent is subject to several conditions, including negotiation of a definitive agreement by Sept. 1.

NEW YORK FACILITY

Operation of Steuben's facility in depleted Adrian gas field is to start in August.

Development of the gas storage field, a Devonian reef reservoir, required addition of nine wells, a 3,000 hp compressor station, and a 14 mile pipeline to connect the station to Consolidated Natural Gas Co.'s interstate system at Woodhull, N.Y. When complete, the field will have storage capacity of 6.2 bcf, with a peak withdrawal rate of 60 MMcfd.

Three local distribution companies have signed 20 year storage agreements with Steuben: Public Service Electric & Gas and Elizabeth-town Gas, both of New Jersey, and Commonwealth Gas of Massachusetts.

Steuben Gas is a partnership between affiliates of ANR Storage Co., Detroit, and Arlington Storage Corp., Boston. ANR is wholly owned by Coastal Corp., and Arlington is a private energy development company.

MOSS BLUFF

The Moss Bluff agreement will become effective Nov. 1 when an existing 1 year contract with Channel expires. The new deal runs through Mar. 31, 2000.

The agreement with Channel also calls for Tejas Power Corp. and Phibro Energy Inc. to provide long term gas sales service to Tenngasco Marketing Corp. and for Channel to provide long term transportation services to Phibro and Tejas.

Moss Bluff's storage facility is a joint venture between subsidiaries of Phibro and Tejas.

The facility connects with five major interstate and intrastate pipelines, creating a pooling point for access to an array of gas supply sources and to gas markets in several areas, Tejas said.

QUESTAR'S DEAL

Operated by Questar since 1976, Clay Basin has provided firm contract storage service mainly for the company's transmission division and

Northwest Pipeline Corp. The field has an injection capacity of about 30 bcf/year and can readily be expanded, Questar said.

Questar filed its application in February for an open access certificate for gas storage in the field.

FERC approved the certificate May 21. However, Questar immediately filed an emergency request for clarification or rehearing to consider the cost of the field's cushion gas. A final order issued June 17 clarified that issue.

FERC also approved Questar's request to increase its transmission division's working gas level to 10 bcf/year from 7.5 bcf/year. This allows the company to meet sales service obligations to Mountain Fuel Supply Co., Salt Lake City, for peak day demand during the winter heating season.

Questar conducted an open season Mar. 16-31 to accept requests for 9.8 bcf of available firm or interruptible gas storage at Clay Basin. Washington Natural Gas Co., Seattle, signed a 22 year service agreement for the entire volume on a firm basis.

Northwest Pipeline Corp. recently reduced its Clay Basin storage requirements, which made an additional 5.4 bcf of working gas capacity available to other customers. Questar mailed service agreements to 21 potential firm customers who submitted firm service requests after the open season ended.