Jefferson Island Storage & Hub, LLC Files Permit Application to Expand Natural Gas Storage Facility in Louisiana

Jun 30, 2010, 17:53 ET from AGL Resources

ERATH, La., June 30 /PRNewswire-FirstCall/ -- AGL Resources (NYSE: AGL) subsidiary Jefferson Island Storage & Hub, LLC (JISH) today announced that it has filed a permit application with the Louisiana Department of Natural Resources to expand its natural gas storage facility near the Henry Hub.

JISH currently operates two natural gas storage caverns in the Jefferson Island salt dome approximately 4,000 feet below the surface of Lake Peigneur in Iberia Parish.

The existing caverns have operated safely since 1994.

"We are confident that the environmental, safety and water-usage data that we have submitted with our permit application will demonstrate that Jefferson Island is among the most suitable sites for new storage caverns in the region," said Dana Grams, president of Pivotal Energy Development, a division of AGL Resources company, which owns and operates JISH. "Throughout the permitting process, we will continue to work with the local community so our neighbors fully understand what the project entails and our ongoing commitment to being a good corporate citizen."

Grams also noted that the addition of two caverns at a storage site that is so closely connected to the Henry Hub and is currently in operation should provide JISH with a competitive edge in the marketplace and provide needed storage capacity to the nation's natural gas infrastructure.

Pending state approval, the new caverns could enter commercial operation within five years, expanding the working gas capacity at JISH from approximately 8 billion cubic feet to approximately 20 Bcf.

The proposed expansion at JISH is expected to offer significant economic impact to Vermilion and Iberia Parishes, according to an independent study. The anticipated benefits include:

  • creation of more than 200 direct and an additional 140 indirect jobs for the local economy during the four to five years of cavern construction
  • addition of approximately $93 million to the local economy from construction and development expenditures
  • contribution of as much as $2.5 million per year to the local economy from ongoing operations and maintenance activities
  • generation of increased sales and property tax revenues

In November 2009, the Louisiana Mineral and Energy Board approved an operating agreement between JISH and the state that enabled the company to resume its efforts to gain the regulatory approvals needed to proceed with its planned expansion.

As part of the operating agreement, JISH agreed to several benefits specifically for local residents, including:

  • Restriction of the use of future caverns to store only natural gas
  • Commitment to limit average daily withdrawal of water from the Upper Chicot aquifer to 3 million gallons per day during cavern creation

In May, the company drilled a test well that validated its assumptions that the non-potable water from the Lower Chicot aquifer can be used for the balance of water needed to carve out the caverns in the salt dome without adversely impacting the Upper Chicot -- the area's main water source for residential, commercial and agricultural uses.

About AGL Resources

AGL Resources (NYSE: AGL), an Atlanta-based energy services company, serves approximately 2.3 million customers in six states. The company also owns Houston-based Sequent Energy Management, an asset manager serving natural gas wholesale customers throughout North America. As an 85-percent owner in the SouthStar partnership, AGL Resources markets natural gas to consumers in Georgia under the Georgia Natural Gas brand. The company also owns and operates Jefferson Island Storage & Hub, a high-deliverability natural gas storage facility near the Henry Hub in Louisiana. For more information, visit

Forward-Looking Statement

Certain expectations regarding the future expansion of the JISH existing storage facility referenced in this press release are forward-looking statements. Our expectations are not guarantees and are based on currently available information. While we believe our expectations are reasonable in view of currently available information, our expectations are subject to future events, risks and uncertainties, and there are several factors -- many beyond our control -- that could cause results to differ significantly from our expectations. Such events, risks and uncertainties include, but are not limited to, the inability of the company to obtain permits and other approvals necessary to complete the proposed expansion, resulting in a delay in project completion; actions by competitors, suppliers, customers or others that might result in a delay in project completion; the estimated economic benefits to Louisiana of the Jefferson Island project; the impact of changes in state and/or federal legislation and regulation; financial market conditions and general economic conditions; uncertainties about environmental issues and the related impact of such issues; and other factors that are provided in detail in our filings with the Securities and Exchange Commission, which we incorporate by reference in this press release. Forward-looking statements are only as of the date they are made, and we do not undertake to update these statements to reflect subsequent changes.

SOURCE AGL Resources