Icon NGS has said that its wholly owned subsidiary, Delhi Gas Storage has entered into an agreement with Atmos Pipeline and Storage, an indirectly wholly owned subsidiary of Atmos Energy, providing Delhi the exclusive option to acquire the rights to complete the development of the Fort Necessity natural gas storage project in Franklin Parish, Louisiana.
Icon has also acquired the surface, storage, water, and brine disposal rights to lands on and around the South Tallulah Dome in Madison Parish, Louisiana.
The company said that the combined projects will provide Icon NGS with up to 45BCF of gas storage capacity serving the pipelines in and around the Delhi hub located in northern Louisiana.
The Delhi hub is emerging as a critical point in the natural gas transportation grid, serving growing natural gas supplies from the Haynesville, Barnett and Fayetteville shales, the Gulf of Mexico and Gulf Coast liquefied natural gas facilities. The Delhi hub provides access to multiple premium markets, including those located in the Midwest, Ohio Valley, Northeast and Southeast.
The diversity of supply sources and end-use markets served by the Delhi hub supports the need for flexible, high-deliverability, multi-cycle gas storage services providing enhanced transportation services and market liquidity. Icon NGS plans to offer a full range of firm and interruptible storage, balancing, park and loan, and wheeling services from both salt dome projects.
Atmos Energy conducted a non-binding open season for the Ft Necessity project in June of 2008 and received bids in excess of the capacity offered at the time. Icon NGS intends to hold an open season for the remaining capacity in Fort Necessity’s first cavern within the next 30 days.
The first cavern is expected to commence commercial operations in the third quarter of 2012. As part of the transaction with Icon NGS, an affiliate of Atmos Energy agreed to purchase firm storage service for a portion of the first cavern of Fort Necessity.
In June 2009, the Federal Energy Regulatory Commission issued the Fort Necessity Gas Storage project a Certificate of Public Convenience and Necessity to construct 15BCF of working gas capacity with interconnections to Columbia Gulf Transmission, Tennessee Gas Pipeline (800 Line), ANR Pipeline, and Regency Intrastate. Atmos Energy subsequently filed an application with the FERC in September 2009 to transfer the certificate authority to one of its subsidiaries, Fort Necessity Gas Storage.
As currently permitted, Fort Necessity will provide direct access to the Delhi Hub through storage injection and withdrawal rates up to 500MMCF per day and 1,500MMCF per day, respectively.
Located 15 miles east of the Delhi Hub, South Tallulah is adjacent to the pipeline corridor containing Mid-Continent Express, Southeast Supply Header, Gulf Crossing and Columbia Transmission’s Vicksburg lateral. South Tallulah Gas Storage is expected to commence commercial operations in 2013.