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Amanda McElfresh
amcelfresh@theadvertiser.com
The Daily Advertiser - Lafayette, LA
Originally published October 29, 2006
Since June, AGL Resources has been mentioned countless times throughout Iberia and Vermilion parishes as some residents fight its plans to build two more salt caverns for natural gas storage beneath Lake Peigneur.
But what has not been discussed as often is why the project is important to the company and what it hopes to accomplish.
Susan Meyers, director of public affairs for AGL, said an increased demand for natural gas, particularly after last year's hurricanes, led AGL to pursue an expansion project to store more gas beneath the lake.
"After what everyone saw last year after the hurricanes, it's obvious why you need to store natural gas," she said, referring to the gas shortages and skyrocketing prices that were seen throughout the country last year. "Natural gas is key to our economy. It's not a luxury at this point. It's essential to people's lives."
Meyers said the company got its start in the utility business 150 years ago, primarily serving customers along the East Coast.
Since then, AGL has grown into an operation that reported $2.7 billion in revenues in 2005 and owns utility companies in Georgia, Tennessee, Florida, Virginia, Maryland and New Jersey. AGL serves more than 2.2 million customers and employs more than 2,300 people.
Its first foray into natural gas storage was in October 2004, when AGL bought the two existing salt caverns at Lake Peigneur and began its Jefferson Island Storage and Hub operations.
Since then, one of AGL's business units, Pivotal Energy Development, has been operating the two caverns and the 16 miles of pipeline that pumps gas into and out of the caverns.
"It is strategically located near the Henry Hub, so what a great place to store natural gas," Meyers said. "Also, its proximity to the Gulf of Mexico makes it ideal for our customers and the state of Louisiana."
The main Jefferson Island Storage and Hub facility is located on La. 89 near the Iberia/Vermilion parish line and is used to process the natural gas stored in the two salt caverns beneath Lake Peigneur. Using a system of underground pipelines, the company brings in natural gas for storage, then pumps it out of caverns as demand dictates.
Steve Cave, AGL's director of investor relations, said only between 2 percent and 2.5 percent of the company's yearly earnings come from the two caverns. But he said the company believes enough in the location that it has spent about $17 million on its expansion project as of August, and expects the total cost of the project to amount to about $160 million.
"From a financial standpoint, it has been a very important project to us," he said. "This was a perfect opportunity for us to get into this business two years ago, and it's become an important part of our natural gas infrastructure. This is critical, not only for us, but for the entire natural gas market."
Although the project isn't as large as AGL's operations in other states, the company says it is committed to its plans and sees the expansion as providing long-term benefits to the area.
"It's a fraction of our company, but we believe it's good for the long-term future of our customers all over the country," Meyers said. "We'll be able to move the gas into and out of the caverns quickly, and we'll also be able to bring jobs, tax dollars and industry to this part of the country."
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