FAHEY SCHULTZ BURZYCH RHODES rL '
Transcript of FAHEY SCHULTZ BURZYCH RHODES rL '
RICHARD]. AARON • FAHEY raaronla)fsblawycrs.com SCHULTZ 517.381.3209 direct BURZYCH517.381.3180 fax 517.974.2309 cell RHODES rL '
ATTORNEYS AT LAW
July 21, 2009
Ms. Mary Jo Kunkle Via E-File - Paperless Executive Secretary Michigan Public Service Commission 6545 Mercantile Way Lansing, MI 48909
Re: In the matter ofthe Application of Washington 10 Storage Corporation for Ex Parte Approval to commence Phase III Operation in 2009 at the Shelby 2 Storage Field MPSC Case No. U-16050
Dear Ms. Kunkle:
Enclosed for filing is the Application of Washington 10 Storage Corporation for Ex Parte Approval of proceeding to the certificated Phase III operation in 2009, including Exhibit A (summary of Shelby 2 operations) and the Affidavit of Matthew Rowan.
Very truly yours,
FAHEY SCHULTZ BURZYCH RHODES PLC
Richard J. Aaron
Ilkp Ene.
G\Clients\MICHCON\] 6050\CORR\2009.0721 MPSCdoc
41510kemo Road - Okemos,M148864 - tel5J7.381.0100 - fax 517.381.5051 _ www.fsblawycfHom
STATE OF MICHIGAN
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
In the matter of the Application of ) Washington 10 Storage Corporation for ) Case No. U-16050 Ex Parte Approval to commence ) Phase III Operation in 2009 at the Shelby 2 ) Storage Field )
APPLICATION OF WASHINGTON 10 STORAGE CORPORATION FOR EX PARTE APPROVAL TO COMMENCE ITS CERTIFICATED PHASE III
OPERATION IN 2009
Washington 10 Storage Corporation (“Washington 10”) respectfully requests that
the Michigan Public Service Commission (“Commission”) approve, ex parte, the early
commencement of its Phase III operation of the Shelby 2 Storage Field in 2009. In
support of its request Washington 10 Storage Corporation states as follows:
1. Washington 10 Storage Corporation (“Washington 10”) is owned and
operated by DTE Gas Storage Company, a subsidiary of DTE Energy, Inc., a corporation
organized and existing under the laws of the State of Michigan with its principal offices at One
Energy Plaza, 688 WCB, Detroit, Michigan 48226-1221.
2. Washington 10 owns and operates as part of its natural gas storage complex a
storage field in Section 2 of Shelby Township (“Shelby 2”). Shelby 2 has a total storage
capacity of approximately 0.4 Bcf (8.1 Bcf working gas capacity, 2.3 Bcf base gas capacity)
and is connected to the Washington 10 Compressor Station via 4.5 miles of a 20-inch diameter
pipeline (the “Shelby 2 Pipeline”).
3. In its Order issued June 12, 2007 under Case No. U-15149, the Commission
issued a certificate of public convenience and necessity authorizing Washington 10 to acquire,
construct, own, and operate Shelby 2 and the Shelby 2 pipeline. Under the terms of the Settlement
Agreement between Washington 10 and the Commission Staff, it was determined that the Shelby 2
2
field would be developed in a series of three phases. As discussed in the direct testimony in
Case No. U-15149, Washington 10 anticipated Shelby 2 would commence Phase I operations
in April of 2008 with Shelby 2 operating at its Phase I maximum stabilized wellhead pressure
(“MSWP”) of 1,311 psig for the 2008/2009 season. In Phase II, the MSWP would increase to
1,585 psig for the 2009/2010 season and in Phase III the MSWP would increase to 1,811 psig
for the 2010/2011 season and thereafter. Under each Phase, the storage capacity would
increase with a total working capacity of 4.9 Bcf in Phase I, a total working capacity of 6.6
Bcf in Phase II, and ultimately a total working capacity of 8.1 Bcf in Phase III.
4. The Shelby 2 project was successfully constructed and commenced injection
operations in December of 2007, ahead of the anticipated April 2008 in-service date. Via the
Shelby 2 Pipeline, the Washington 10 Compressor Station provides all the compression and
processing needs for Shelby 2 under the integrated operation of the Washington 10 Complex
which also includes the Washington 10 and Washington 28 storage fields. Under a
traditional storage development, the compression facilities for a new field are sized to allow
for the injection of the reservoir’s full working volume during the summer months
(approximately 200 days). The existing Washington 10 Compressor Station, with 26,200
horsepower of compression facilities, provides a significantly greater amount of horsepower
to the Shelby 2 operation than would be traditionally available for a field of this size. Given
this enhanced operational flexibility, Washington 10 is able to fill the working capacity of
Shelby 2 in substantially less than 200 days. As a result of this operational flexibility, Shelby
2 achieved its Phase I operating pressure in June of 2008, well ahead of the end of the
injection season in late October.
5. With Shelby 2 at its Phase I operating pressure in June of 2008, Washington
10 was able to conduct several extended shut-in periods to validate the integrity of the
3
reservoir. At the end of an injection season, Washington 10 requires a shut-in period of
approximately 5-10 days to validate the integrity of the reservoir. Shelby 2 was shut-in for
over 150 days in 2008 during which periods of time the field performed as expected. During
the 2008/2009 winter season, the Shelby 2 field was cycled down to its base gas level thus
allowing Washington 10 to obtain a significant amount of operating data to further identify
the baseline performance of the field (see, Exhibit A attached to this Application for
summary of Shelby 2 operations).
6. Since operation began a number of changes have occurred in the market place
served by Shelby 2. Recent development of domestic gas supply has resulted in the significant
reduction of natural gas prices. Nationally, as well as at Washington 10, storage is filling at a
record pace as storage customers are maximizing their storage positions storing low cost
summer gas before winter prices come into effect. With the price of gas at the MichCon City
Gate at a six-year low, Washington 10 has received requests from customers looking for any
working capacity available yet this year to secure additional low cost gas supply.
7. In light of this current market demand and the resulting customer benefit of
securing low cost gas supply, Washington 10 initiated an assessment of the Shelby 2 field to
determine possible enhancements of its storage capacity for 2009. Given Washington 10’s
operational flexibility to rapidly fill and to conduct extended shut-in periods at Shelby 2,
Washington 10 is proposing to proceed to its certificated Phase III operation at Shelby 2 in
2009. By achieving the certificated Phase III operating pressure a year prior to initially
planned, Washington 10 will be able to provide approximately 1.5 Bcf of incremental storage
capacity in 2009 for the 2009/2010 season.
8. To proceed to its certificated Phase III operation in 2009 in a safe and reliable
manner, Washington 10 proposes the following operating plan. As illustrated in Steps I to IV in
4
Exhibit A, Washington 10 proposes that upon achieving its Phase II operating pressure of 1,585
psig, anticipated to occur in early August, Washington 10 will conduct an extended shut in to
verify the integrity of reservoir and will review the data with MPSC Staff. Upon verification
that the reservoir is performing as expected at the Phase II operation, Washington 10 proposes
to immediately proceed to its Phase III MSWP of 1,811 psig upon which it will again perform
an extended shut in to validate the integrity of the reservoir at its Phase III operation.
9. Under this proposed operating plan, Washington 10 will be able to validate the
integrity of the Shelby 2 field for Phase II and III at the same level of safety and prudence as
contemplated under the shorter shut-in periods performed over multiple seasons as initially set
forth in the Settlement Agreement approved in Case No. U-15149.
10. Washington 10 has reviewed its current monitoring programs at Shelby 2 and
has confirmed that they are adequate for the certificated operation. The Shelby 2 pipeline will be
operating within the maximum allowable operating pressure (MAOP) of 2,160 psig as initially
certificated and no additional facilities or modifications to existing facilities will be required for
the operation proposed in this Application. Proceeding to the Phase III operation will have no
additional environmental impact. No new environmental issues are raised by this Application
and all environmental effects of the storage field and pipeline have been addressed in the
testimony filed in Case No. U-15149.
11. Washington 10 does not seek approval for any changes to its rates or charges to
its general service customers. Because there will be no increase in the cost of service and no
customers’ general service rates will change as a result of the approval of this Application, the
Commission may approve the Application without notice or hearing as provided in MCL 460.6a.
12. The Commission has jurisdiction pursuant to 1923 PA 238, as amended, MCL
§486.251 et. seq; 1929 PA 9, as amended, MCL §483.101 et. seq; 1919 PA 419, as amended,
MCL §460.51 et. seq; 1939 PA 3, as amended, MCL §460.1 et. seq; 1929 PA 69, as amended,
MCL §460.501 et. seq; and 1969 PA 165, as amended, MCL §483.151 et. seq.
RELIEF REQUESTED
WHEREFORE, the reasons stated above, Washington 10 Storage Company
respectfully requests that the Commission grant ex parte approval of this application, and
fmd that:
A. The Shelby 2 storage field should be allowed to proceed to its certificated Phase
III operation of the storage field in 2009 in accordance with its proposed operating plan
reflected in this Application, and
B. Grant any other relief the Commission deems lawful and appropriate.
Respectfully submitted,
Washington 10 Storage Corporation,
Dated: July 21, 2009 By: _ Pete Cianci, President - DTE Gas Storage
Richard J. Aaron (P 35605) FAHEY SCHULTZ BURZYCH RHODES PLC Attorneys for Applicant 4151 Okemos Road Okemos, Michigan 48864 (517) 381-3209 [email protected]
G:\Clients\MlCHCON\16050\PLEAD\20090721 GSP Shelby 2 Phase III Application.docx
5
Case No. U‐ Exhibit No.: A Page 1 of 1