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FERC Issues Order to Windy Hill Gas Storage, LLC on Request for an Extension of Time(Targeted News Service Via Acquire Media NewsEdge) WASHINGTON, May 16 -- The U.S. Department of Energy's Federal Energy Regulatory Commission issued the text of the following delegated order: In Reply Refer To: OEP/DPC/CB-1 Windy Hill Gas Storage, LLC Docket No. CP06-19-000, et al. section 375.308(w)(4) Mr. James F. Bowe, Jr. Windy Hill Gas Storage, LLC King & Spalding 1700 Pennsylvania Avenue, NW, Suite 200 Washington, DC 20006-4740 RE: Request for an Extension of Time Dear Mr. Bowe: On May 19, 2006, in the above-referenced proceeding, Windy Hill Gas Storage, LLC (Windy Hill) was authorized to construct and operate a natural gas storage facility located in Morgan County, Colorado. The order gave Windy Hill four years to complete construction and place the facilities in service. Windy Hill began limited construction of the project in 2007, but then suspended all construction in 2008. On May 5, 2010, Windy Hill was granted a three-year extension of time until May 19, 2013 to complete the facilities and make them available for service. On March 29, 2013, Windy Hill filed a request for an additional three year extension of time, until May 19, 2016. Windy Hill asserts that market conditions and demand for natural gas storage services have not been supportive of natural gas storage development in the Rocky Mountain and West regions. However, Windy Hill states it is committed to this project as evidenced by its acquisition of additional water rights and preservation of all water leases, its continued lease payments, and its discussion with parties interested in storage services. Windy Hill states that the adverse market conditions, as well as demands for limited management time presented by other gas storage projects Windy Hill's parent company was developing, precluded Windy Hill from resuming construction of the project. Windy Hill further states that it has determined that project development will take substantially longer than was originally projected, and would cost a good deal more than the amounts originally budgeted. As a result, Windy Hill avers that it was required to re-examine both the project's design and economics to confirm the project's viability. Windy Hill states that it continues to consider alternative design options for the storage facility that would better position the project to offer storage services, and will file to amend its certificate if necessary. Windy Hill's request for another three-year extension of time until May 19, 2016, to complete construction and make the facilities available for service is denied. Windy Hill has had seven years to construct and make its facilities available for service. While Windy Hill started some limited well drilling and road construction activity in 2007, in March 2008, it suspended all project construction work. No further construction activity, other than maintenance of erosion control devices and monitoring of wells drilled to date, has taken place since 2008. Windy Hill states that the project's challenging economics, soft demand for storage services in the region, and tight financial markets have precluded its resumption of construction. However, Windy Hill states that it has positioned itself to resume development and construction activities when storage market and financial market conditions once again appear favorable. Given these statements, Windy Hill's desire to maintain the viability of its certificate and its belief that the storage market and financial market conditions will eventually become favorable are not sufficient reasons to grant a further three-year extension of time. In the event Windy Hill determines that circumstances have changed to merit the resumption of the development of its project, it may file, as it has contemplated, another application. Further, the bi-weekly status reports for Windy Hill's project indicate that some work on roads within the storage field property was performed and new site roads to access the well sites were constructed. In addition, some drilling of cavern wells, water supply wells, brine disposal wells, and groundwater monitoring wells was performed in support of the project. With this denial of the request for an extension of time, Windy Hill must now account for the construction activities it performed. Within 10 days of the date of this letter, Windy Hill must provide a description of the actual or expected disposition of all wells that were constructed. Finally, Windy Hill should describe any restoration activities that have been or will be performed on any lands affected by the construction. This action is taken pursuant to authority delegated by the Commission in 18 CFR section 375.308(w)(4). Sincerely, Jeff C. Wright Director Office of Energy Projects cc: Public File, Docket Nos. CP06-19-000, CP06-20-000, CP06-21-000 All Parties TNS CT21CT-130516-4352858 61ChengTacorda (c) 2013 Targeted News Service |