I finally stumbled over something that forced me to get my shit together and 
update my email addresses on you guys.  Its been a strong couple of weeks for 
the merchant storage business!  First you guys (and FERC) finally put the 
last nail in CNG and Penn Fuels' coffins on Tioga, then old Larry,John and 
Dill finally dust off Lodi and get going!  Wow!  I shouldn't have joined the 
evil empire quite so fast!

Seriously, congratulations on starting construction up in PA.  I ran into my 
old law partner Hill out in DC last week and got a great update on the recent 
battles against those drips at CNG and Penn Fuel.  Siggy, what are you going 
to do without Carol Lynn to fight with?????  Best wishes for continued 
success!  DF 
---------------------- Forwarded by Drew Fossum/ET&S/Enron on 02/29/2000 
10:08 AM ---------------------------


CA Merchant Storage Plant Passes Major Test

     California regulators Thursday released a final environmental impact 
report for the
     state's second merchant underground natural gas storage project in the 
Sacramento
     Valley of northern California. Absent new opposition from surrounding 
landowners,
     Texas-based Western Hub Properties hopes to have its $80 million storage 
project
     operating by the end of this year, following a year's delay in the 
approval process for
     environmental review. 

     Western Hub is also pursuing a similar-sized underground storage project 
in Texas and
     it has identified a site for a second California storage operation in 
the Bakersfield area,
     according to Jim Fossum, Western's California operations manager. 

     Final approval of the Lodi Gas Storage Project located south of 
Sacramento should
     come in May, Fossum said, meaning that construction could begin this 
summer and be
     operational before the end of the year. "We see the environmental report 
as the 'light at
     the end of the tunnel'," Fossum said. 

     Under California's environmental review process (CEQA), the California 
Public Utilities
     Commission (CPUC) prepared a draft environmental report (EIR) 
identifying the
     project's environmental impacts and mitigation measures. The draft then 
was circulated
     to appropriate public agencies and the general public for comment before 
the final
     report can be issued. Three public hearings on the draft report were 
held by the CPUC
     last October. 

     Under the CPUC's procedures, a proposed decision from the administrative 
law judge
     for the case is due by mid-March, after which there is a 30-day period 
before the
     project can come before the five-member commission for a final decision, 
a CPUC
     spokesperson said. 

     "We hope to be on-line, and that is 'hope', this year because we already 
have our
     compressors and pipe, so it is just a matter of getting crews there and 
that can go pretty
     quickly," Fossum said. "In the best of all worlds it would be this year; 
in the worst case,
     it would be a year from now." 

     Western Hub has some of its customers lined up, and it is in current 
discussions with
     others, said Fossum, declining for competitive reasons to even identify 
the types of
     customers, although they are expected to be large shippers, marketers, 
power plant
     operators and other large industrial customers. 

     The Lodi project is designed for full operation as having a 12 Bcf 
working capacity,
     with 400 MMcf/d injection and 500 MMcf/d withdrawal capacities. It will 
be
     connected to Pacific Gas and Electric Co.'s backbone transmission system 
through a
     35-mile pipeline consisting of three miles of 30-inch-diameter and 32 
miles of
     24-inch-diameter pipe. During the past year's delay in start-up, Western 
has "moved
     the pipeline around a bit, but not a whole lot," Fossum said. "to make 
accommodations
     to nearby farmers." 

     Western Hub's similar-sized Texas project is south of San Antonio and 
would be
     connected with three natural gas transmission systems in the area: 
Houston Pipeline,
     PG&E --- Texas (bought recently by El Paso) and the City of San Antonio. 
"We
     expect to have it on-line the same time as Lodi," Fossum said. 

     Fossum said Western is "moving ahead" with a second California site in 
the Bakersfield
     area, but he declined to give any further details, noting Western Hub 
expects to have
     more definitive information next month. He did say that if a second 
California project
     moves ahead, Western expects to have it operational by early 2002. 

     Unlike northern California, storage in the Bakersfield area would not 
have to connect
     with the local utility transmission system of Southern California Gas. 
The combined
     Kern River/ Mojave interstate pipeline also comes into the area.