Gas Company AGL Resources Stores Natural Gas

In Salt Cavern Under Lake;

Wants to Expand; Tells Public ‘Stellar Safety Record’

But Tells SEC ‘Transporting And Storing Natural Gas Involves Numerous Risks’

More:  ‘Risks could result in serious injury to employees and non-employees, loss of human life, significant damage to property, environmental pollution’

Same Lake Texaco Destroyed by Drilling Thru Salt Mine in 1980

The excesses of the energy industry – with its inability to learn from its own mistakes – are on full display at Lake Peigneur near New Iberia, Louisiana.

The once shallow, fresh water lake is now a deeper saltwater lake, thanks to Texaco converting it to a whirlpool and sink hole when it drilled through the salt dome under the lake in 1980.

Invest 7 minutes and watch the amazing whirlpool footage from the History Channel on the Save Lake Peigneur website: http://www.savelakepeigneur.org/site.php

Assault on Lake Peigneur

One would think that would be enough of an assault on Lake Peigneur and its community, but that would be underestimating the energy industry.

Today, the natural gas industry in the form of Atlanta-based AGL Resources wants more from the lake.

AGL Resources currently operates two salt dome storage caverns under the lake with a total capacity of 10 billion cubic feet, of which 7 billion cubic feet is working gas capacity, according to its 2009 Annual Report [p. 16 of AR & p. 18 of pdf file below under Links & Resources].¹

If AGL gets its way with regulators, it hopes to nearly triple its working gas capacity from 7 to 19.5 billion cubic feet, as noted in the company’s Annual Report [p. 27 of Form 10-K in AR & p. 29 of pdf file below under Links & Resources].²

It proposes to do this by adding two new caverns; and it wants to create those new storage caverns by pumping in millions of gallons of fresh water to dissolve the salt.

While numbers vary depending on the source, AGL wants to pump approximately 3 million gallons of fresh water per day out of the nearby upper Chico Aquifer – for 18 months or as long as 4 years, according to news accounts and an AGL press release.³

Save Lake Peigneur

Fortunately, there is an organization of residents dedicated to saving Lake Peigneur from this latest assault.  Nara Crowley, is President of Save Lake Peigneur, Inc., and you can visit the organization’s excellent website at this link: http://www.savelakepeigneur.org/site.php

Typical of the gas industry, which hasn’t changed its playbook in more than 50 years, AGL touts the safety of salt dome storage for pressurized natural gas in virtually absolute terms.

AGL:  ‘Steller Safety Record’ or ‘Inherent Hazards’?

For example, on its “lakepeigneurfacts” page of the company website, it states:⁴

“Salt dome caverns designed, built and operated specifically for natural gas storage have a particularly stellar safety record.  There have been no incidents of fire, accidental releases or explosions in caverns developed specifically for natural gas storage.”

From AGL Resources Website

Really?

Then what is one to make of this statement – also from AGL – and found on page 31 of its published 2009 Annual Report?  This is part of AGL Resources’ Form 10-K, a required filing with the U.S. Securities and Exchange Commission (SEC).

Putting public relations fluff in a Form 10-K filed with the SEC is a no-no.  Read this section and decide which side of AGL’s “face” is more credible (emphasis added to the following):

“TRANSPORTING AND STORING NATURAL GAS INVOLVES NUMEROUS RISKS THAT MAY RESULT IN ACCIDENTS AND OTHER OPERATING RISKS AND COSTS.

Our gas distribution and storage activities involve a variety of inherent hazards and operating risks, such as leaks, accidents, including third party damages, and mechanical problems, which could cause substantial financial losses.  In addition, these risks could result in serious injury to employees and non-employees, loss of human life, significant damage to property, environmental pollution and impairment of our operations, which in turn could lead to substantial losses to us.  In accordance with customary industry practice, we maintain insurance against some, but not all, of these risks and losses.  The location of pipelines and storage facilities near populated areas, including residential areas, commercial business centers and industrial sites, could increase the level of damages resulting from these risks.  The occurrence of any of these events not fully covered by insurance could adversely affect our financial position and results of operations.”

From AGL Resources’ Form 10-K

Filed with the SEC

[See p. 31 of published 2009 Annual Report,

or p. 33 of pdf file below under

Links & Resources]⁵

The allegation that salt dome gas storage caverns “have a particularly stellar safety record” – would bring a declaration of “somebody is smoking dope” from a CEO I know.  (Obviously he does not work in the gas industry.)

Words Come with Grease Fitting

I know, I know, those two sentences from AGL about “stellar safety record” must have a grease fitting somewhere for pumping lubricant into the allegation and thereby claiming it is accurate.

But those who live on Planet Earth know about catastrophic failure when it comes to salt dome storage caverns.  Houston-based Spectra Energy, which inspired this blog, had a catastrophic failure of its salt dome storage cavern in Moss Bluff outside of Houston.  In 2004, Moss Bluff had two explosions, 6 1/2 days of fire with flames as high as 1,000 feet and two evacuations.

To read our post on that, go to this link: Moss Bluff Incident – http://www.spectraenergywatch.com/blog/?p=390

In December, a natural gas leak at the Williams underground salt dome storage facility on Salt Dome Road in Eminence, Mississippi, made the news.  According to several reports, the gas leak migrated to a water well and “actually blew the well out.”  Some 25 families had to be evacuated from their homes.⁵ Link:  http://leadercall.com/local/x1939350187/Natural-gas-leak-forces-evacuations

On the Save Lake Preigneur website, readers will find an article and a chart by John M. Hopper, who at the time of publication was president and CEO of Falcon Gas Storage Company.  Hopper’s chart lists “Catastrophic Events Involving Salt Cavern Storage Facilities Since 1972.”

Ten US salt storage caverns are listed (including Moss Bluff).  Five of these catastrophic failures involved “loss of life or serious injuries as well as property damage.”  The other five involved “only catastrophic loss of property,” according to Hopper.

For a downloadable copy of Hopper’s article titled, Gas Storage And Single-Point Failure Risk, go to this link on the Save Lake Peigneur website: http://www.savelakepeigneur.org/site18.php Look under the first subhead, “Explosion,” and you’ll see the hotlink at the bottom of that section.

In the meantime, which face of AGL Resources is credible – “stellar safety record” or “risks [that] could result in serious injury to employees and non-employees, loss of human life, significant damage to property, environmental pollution ….”?

Links & Resources

^{1, 2, 5} AGL Resources 2009 Annual Report & Form 10-K – Refer to pages cited on published annual report or to the pdf file pages.  Pdf file: 2009annualreport

³ News accounts of AGL Resources’ proposal to expand salt storage caverns under Lake Peigneur using fresh water from upper Chico Aquifer, said to be the water source for south Louisiana.

> AGL Resources expected to use 1 billion gallons of water from Chico Aquifer, by Chris Rosa, Vermilion Today, January 27, 2011 http://www.abbevillenow.com/view/full_story/11139590/article-AGL-Resources-expected-to-use-1-billion-gallons-of-water-out-of-the-Chico-Aquifer?instance=home_news_lead

> Lake Peigneur plans advance – State board OKs suit settlement; AGL can ask for permits, by Richard Burgess, The Advocate, December 10, 2009  http://www.2theadvocate.com/news/78934987.html?showAll=y&c=y

> AGL Press release states “AGL will only use water for four years as it carves out the caverns.” See 4^th Myth/Reality bullet point in “Misconceptions Fuel Jefferson Island Opposition” – AGL press release by Tim Goodson, managing director of safety & environmental health at AGL Resources, October 24, 2006.  In addition to appearing in the AGL “Press Room” on line, this apparently ran in the Daily Iberian, New Iberia, LA: http://www.aglresources.com/pressroom/press_jish102406.aspx

Or pdf file: agl-resources-press-room

⁴ “Salt dome caverns … have a … stellar safety record.” – AGL Website at this link (see first paragraph under “Safety & Environment”): http://www.lakepeigneurfacts.com/Safety-And-Environment.asp

Or pdf file:  safety-the-environment-lake-peigneur1

⁵ News accounts of natural gas leak and evacuation at Williams’ Mississippi salt storage cavern –

> Natural gas leak forces evacuations, by David Owens, Laurel Leader-Call, December 29, 2010.  Link: http://leadercall.com/local/x1939350187/Natural-gas-leak-forces-evacuations

> Covington County [Mississippi] Gas Leak Jan. 6^th Update – Pine Belt Press.  Link:  http://pinebeltpress.com/2011/01/covington-county-gas-leak-jan-6th-update/