Region to Get $28 Million Gas Storage Facility | Archives

ELLICOTTVILLE ã Dominion Transmission Inc., Upstate New York’s largest natural gas supplier, plans to build a $28 million compressor station and gas storage facility at Knapp Creek.

Officials at the Richmond, Va.-based company unveiled their plans Thursday at a meeting of the Cattaraugus County Industrial Development Agency here.

Dominion also plans to spend an additional $24.2 million to build a 21-mile pipeline between Quinlan Compressor Station on a 9-acre site off Ho-Ste-Geh Road in the town of Allegany and a station existing compressor near Shinglehouse, Pennsylvania.

IDA has given preliminary approval to a sale-leaseback agreement and fixed fee, 15-year payment-in-lieu of taxes worth more than $3 million to the Allegany Central School District- Limestone, the town of Allegany and the county of Cattaraugus.

PILOT payments to local municipalities will start at $109,588 in the first year and increase to $273,970 in the 15th year of the agreement. The company will pay 10% of the normal amount of property taxes in the second year of the PILOT, up to 100% in the 11th year and thereafter.

The financing agreement will exempt Dominion from sales taxes on construction materials, as well as real estate transfer and mortgage registration fees.

Donald Weekley, Dominion’s director of government affairs, told IDA board members that the projects are part of the company’s $64.8 million northeast storage expansion project which involves Cattaraugus County in New York and Potter and McKean counties in Pennsylvania.

The project near the New York-Pennsylvania border might as well have been built in Pennsylvania, Mr. Weekley said.

“Operationally, it makes more sense to have the compressor station in New York, close to the wellhead of the proposed storage facility,” he added.

“Without the IDA proposal, you could make the case for having the compressor in Pennsylvania,” from a tax standpoint, he explained.

In New York, the state Department of Environmental Conservation will oversee the project, Weekley said. Construction is expected to begin in July and be completed in April 2006.

When completed, the storage facility will allow Dominion, the largest natural gas storage company in the United States, to store approximately 4 billion cubic feet of natural gas in the Quinlan Reef Storage Pool located about 4,600 feet below the surface.

Quinlan Reservoir is a near-depleted Onondaga reef gas play that Pennzoil began developing in 1978, Weekley told IDA. It produced nearly 7 billion cubic feet of natural gas. The storage field, where four additional wells will be drilled, will have a total capacity of 7.9 billion cubic feet, but only about 4 billion cubic feet will be “working gas”.

Geologist Ron Walden told IDA members that Dominion plans to inject gas into the storage field during the summer months and withdraw it during the winter months.

Mr Weekley said two jobs would be created at the compressor station.

The IDA board of directors considered that the project would have no significant impact on the environment.

Comments are closed.