Falcon Gas Storage Company's MoBay Gas Storage Hub Withstands Full Assault from Hurricane Ivan

Business Wire, Sept 21, 2004

HOUSTON -- Falcon Gas Storage Company Inc. today reported that its MoBay Storage Hub facilities withstood a full frontal assault from Hurricane Ivan last week. Located in state waters just offshore in the Mobile Bay area of Alabama, the high-deliverability, multi-cycle (HDMC) gas storage project is slated for development into 45 Bcf of working gas capacity with a maximum withdrawal rate exceeding 1 Bcfd. Falcon is delivering gas production from MoBay to markets in the Southeast and Florida pending receipt of state and federal permits for conversion into gas storage.

"We took a direct hit from the worst storm to hit the Mobile Bay area in 50 years and still sustained only minor damage," said John M. Hopper, Falcon's president and CEO. "Our operations people estimate that waves of up to 48 feet and wind gusts in the 140-150 mph range pounded our production facilities throughout the night and early morning as the hurricane made landfall, but we didn't even lose the roof on our main platform."

Falcon's MoBay project consists of four separate producing gas reservoirs that will be converted into HDMC gas storage. MoBay is served by two existing four-pile gas production platforms, along with related wells and gas gathering systems, set in 12-15 feet of water in the Mississippi Sound just north of Dauphin Island at the entrance to Mobile Bay. Although Dauphin Island sustained major damage from Hurricane Ivan, Falcon's MoBay Gas Storage Hub facilities did not.

"Our MoBay platforms were designed to withstand sustained winds of up to 200 mph and a storm surge as high as 30 feet with wave action up to 50 feet," Hopper added. "Despite all that Ivan threw at us, we were up and running at full production capacity within 72 hours after the storm made landfall. We'd have been making gas deliveries sooner if the take-away pipelines in the area had been fully operational over the weekend. The irony is that storage deliveries are supposed to be available to supplement gas supply lost during events like hurricanes, but that can't happen if the pipelines can't take the gas or if gas storage facilities shut down during hurricanes like some in the Gulf Coast region have done in the past. This won't be an issue at MoBay once it's operational for gas storage because all of our storage facilities will be located onshore and the platforms can then be operated remotely."

Construction to convert Falcon's MoBay project into an HDMC gas storage facility is scheduled to start late in the third quarter of 2005 after all state and federal permits have been obtained. The storage hub will connect with all four pipelines that serve the southeast and Florida market areas: Gulfstream, Florida Gas, Transco and GulfSouth. Interconnections also are planned with all the gas processing and gathering facilities in the Mobile Bay area.

About Falcon Gas Storage Company Inc.

Houston-based Falcon Gas Storage Company is the largest independently-owned developer and operator of high-deliverability, multi-cycle natural gas storage capacity in the United States. In addition to the MoBay Storage Hub, Falcon is developing the Wyckoff Facility, an HDMC gas storage project in New York, through wholly-owned subsidiary Greyhawk Gas Storage Company. Falcon already is the largest privately owned storage provider in Texas with more than 20 Bcf of working gas storage capacity at its Hill-Lake and Worsham-Steed gas storage facilities. Visit Falcon at www.falcongasstorage.com.