Falcon Gas Storage Company Proceeds with Hill-Lake Gas Storage Facility Phase II Expansion

Business Wire, June 10, 2004

Energy Editors/Business Editors

HOUSTON--(BUSINESS WIRE)--June 10, 2004

Falcon Gas Storage Company Inc. today announced that wholly-owned subsidiary Hill-Lake Gas Storage, L.P. has received regulatory approvals to proceed with the Phase II expansion of its Hill-Lake Gas Storage Facility in Eastland County, Texas. Hill-Lake is a high deliverability, multi-cycle (HDMC) natural gas storage facility that serves markets in the Dallas-Ft. Worth area as well as other parts of north, east and west Texas, including the Waha pipeline hub.

"We have just completed an open season for Phase II capacity at Hill-Lake and are very pleased with the market response we received," said Jeff Foutch, Falcon's executive vice president responsible for marketing gas storage capacity. "The market for natural gas storage services definitely is changing, as we are now seeing a willingness to enter into longer-term contracts that has been absent for several years. The past two winters have underscored the value of HDMC storage, especially for winter peak-day demand as well as for meeting the summer and intra-day peak demand requirements of gas-fired power plants. The energy market is reacting to these changing demand profiles and recognizes that HDMC gas storage is one of the keys to assembling a complete gas supply portfolio."

Hill-Lake's Phase II expansion ultimately will add 3 Bcf of additional working gas capacity, as well as 150,000 Mcfd of incremental injection and withdrawal capacity. This will bring Hill-Lake's total peak-day withdrawal capacity to 300,000 Mcfd and total peak-day injection capacity to 300,000 Mcfd. Falcon will initiate the Phase II expansion with conversion of three recently drilled withdrawal wells into storage injection/withdrawal wells, immediately adding incremental injection and withdrawal capabilities. Completion of this initial Phase II expansion step is anticipated within the next 30 days.

Receipt and delivery points at the Hill-Lake facility include the GulfTerra/Energy Transfer North Texas Pipeline, Lone Star Pipeline's Line "X" and Line "WA," and the Enbridge Pipeline system. Additional information on Falcon and Hill-Lake is available at Falcon's Web site, www.falcongasstorage.com, or by contacting Jeff Foutch or Kirby Black at 713-961-3204.

About Falcon Gas Storage Company Inc.

Houston-based Falcon Gas Storage Company is one of the largest independent owners and operators of high-deliverability, multi-cycle natural gas storage capacity in the United States. Through wholly-owned subsidiary Greyhawk Gas Storage Company, LLC, Falcon is developing the Wyckoff Facility, an HDMC gas storage project in New York, and the MoBay Storage Hub in Alabama, an HDMC gas storage project that will serve markets in Florida and the southeast. Falcon is the largest privately owned storage provider in Texas with more than 20 Bcf of working gas storage capacity. Visit Falcon at www.falcongasstorage.com.