Sempra U.S. Gas & Power, LLC, a subsidiary of
), has received approval for the placement of second underground
natural gas storage cavern at its Mississippi Hub Storage facility
from the Federal Energy Regulatory Commission (FERC).
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Located in Simpson County, Mississippi, this additional 7.5 billion
cubic feet (Bcf) cavern will expand the facility's total working
gas storage capacity to 15 Bcf. The Mississippi Hub Storage is
located in the midst of the rapidly growing Southeast natural gas
market. It has operational interconnections in three major
interstate gas pipelines: SONAT, Transco, and Southeast Supply
Header (SESH) that provide bi-directional access to diverse major
markets throughout the Southeast and mid-Atlantic regions.
The facility has injection capability of 450 million cubic feet per
day (MMcfd) and a withdrawal capability of 1,200 MMcfd. Currently,
all the injection capacity of Mississippi Hub Storage is under
contract. The additional injection capacity will become available
to customers as the dewatering process at the new cavern is
In August 2010, first cavern was placed into service at its
Mississippi Hub natural gas storage facility. Cavern 1 was designed
to provide 10-cycle service on 7.5 Bcf of working gas capacity. The
interconnections for the cavern were Southern Natural Gas,
Southeast Supply Header and Transcontinental Gas Pipeline.
The company expects to complete the construction of a third cavern
in 2013. It would add 7.5 Bcf to the facility resulting in an
expansion of the site's storage capacity to 22.5 Bcf.
Besides, operating 15.5 Bcf of underground natural gas storage at
Bay Gas Storage near Mobile, Alabama, Sempra U.S. Gas & Power
operates two natural gas distribution utilities and long-distance
Sempra U.S. Gas & Power is also involved in wind power
generation. Recently, BP Wind Energy, a unit of
) and Sempra U.S. Gas & Power announced that they have moved
into full construction of Mehoopany Wind Farm, Pennsylvania. Once
completed, the wind farm will have the capacity to produce 141 MW
of electricity that will be sufficient to power over 40,000 homes.
This diversified basket of businesses insulates the company from
regulatory rate risks to a great extent. We believe the company
presents a lower risk profile relative to its peers. This bullish
outlook is supported by stable utility earnings, steady progress at
its LNG terminals, renewable power projects in the Pacific
Southwest, the Sunrise Powerlink transmission line and ongoing
installations of smart meter.
However, the above positives are offset due to a lack of any
near-term positive triggers, along with near-term trepidation in
natural gas prices and pending regulatory cases. The company
presently retains a short-term Zacks #3 Rank (Hold) that
corresponds with our long-term Neutral recommendation on the stock.
Sempra Energy is a southern California-based energy services
holding company involved in the sale, distribution, storage, and
transportation of electricity and natural gas. The company's
businesses are broadly divided into Sempra Utilities, Sempra
International and Sempra U.S. Gas & Power.