Crestwood Midstream Revises Finger Lakes LPG Storage Facility Proposal

Crestwood Midstream Partners LP (Houston) is making voluntary concessions in its proposal to store propane in salt caverns in Schuyler County, N.Y. The long-delayed project has been the subject of repeated and vitriolic protests by residents and environmentalists. They assert quality of life issues, pollution concerns, and negative impacts on tourism should prohibit it.

A letter from the Albany, N.Y. law firm DLA Piper to the state Department of Environmental Conservation (DEC) outlined that Crestwood would:

• Reduce storage capacity from 2.1 million barrels to 1.5 million barrels;

• Eliminate the storage of butane; only propane would be stored in the salt caverns;

• Ship propane in and out only by pipeline, removal of both railroad and truck options; and,

• Eliminate two of three brine ponds, proposing only one small pond west of Route 14.

“The changes described will reduce the scale and environmental impacts (potential, actual, and perceived) of the project, responding meaningfully to the concerns of those participating in the issues conference and by stakeholders outside of the DEC proceedings, and will result in further avoidance or mitigation of the impacts,” the letter said. The correspondence also said that the changes were aimed at expediting the approval process for the project.

“We take seriously the concerns and perceptions of our facilities in the communities we share, and the changes we announced this week to our Finger Lakes LPG storage facility demonstrate that commitment. If you combine these changes with the findings of the regulatory experts, you have an energy infrastructure project grounded in science, compromise and community support,” noted Bill Gautreaux, Chief Marketing Officer & President, Crestwood Midstream LP Supply & Logistics Group.

The Federal Energy Regulatory Commission previously granted approval of Crestwood’s plans to expand natural gas storage at the facility located along state Route 14 north of Watkins Glen. DEC is still conducting its environmental review for propane. In June, Consolidated Edison Inc. and Crestwood said they had completed the formation of a joint venture to own and develop Crestwood’s existing natural gas pipeline and storage business located in southern New York and northern Pennsylvania.

As part of the transaction, Crestwood contributed its interstate natural gas pipeline and storage business to a new entity, Stagecoach Gas Services LLC. A subsidiary of Consolidated Edison indirectly purchased a 50% equity interest in Stagecoach for about $945 million, which was distributed to Crestwood. Crestwood also agreed to contribute to Stagecoach its New York intrastate pipeline, and Edison has agreed to contribute about $30 million, which will be distributed to Crestwood.