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NYSE: GAS $40.78 +0.07

Mar 13 2013 3:50PM ET

Overview | JISH Press | Capacity Bids | Open Season

Jefferson Island Storage and Hub Q & A

What is Jefferson Island Storage & Hub? Jefferson Island Storage & Hub (JISH) is a salt dome natural gas storage facility owned by AGL Resources and located near Erath, Louisiana (Vermilion and Iberia parishes). At JISH, currently two underground salt caverns are used to store natural gas before it is put into pipelines and sent to residential and commercial customers throughout the state and country. What does JISH want to do? AGL Resources has applied for permits to expand the JISH storage space by adding two more caverns. Why does JISH need new caverns? The abrupt escalation of fossil fuel prices after Hurricanes Katrina and Rita and the instability of the Middle East emphasized the importance of reliable supplies of natural gas and oil in the United States. It was decided to expand JISH to ensure that AGL Resources always has abundant supplies of natural gas to meet its customers needs in a timely manner.

How will JISH create the new caverns? JISH will use salt extraction to carve out caverns 1,500 feet below the lake bottom. Salt caverns are formed by injecting a water stream down a well bore in order to "wash" a cavity in a thick deposit of salt. The wall of the completed cavern is insoluble and impervious to leakages. Where will the water come from for the process? Water from the Chicot Aquifer will be used to create the new caverns. An independent engineering firm, URS Corporation of Baton Rouge, La., performed an analysis of the impact of the process on the Chicot Aquifer that confirmed that the Chicot has an abundant supply of water that will not be compromised by AGL Resources withdrawals. With 29,400 employees, URS Corporation is one of the largest engineering design firms worldwide and a leading U.S. federal government contractor (www.urscorp.com). How much water will the process use? Approximately 800 millions of water is pumped out of the Chicot Aquifer daily by numerous commercial and noncommercial users. AGL Resources will use 5.18 million gallons a day, approximately 0.6 to 2 percent of its historical usage. The geo-hydraulic study by URS determined that withdrawals by AGL Resources will not adversely impact the water levels in the aquifer nor increase the odds of naturally occurring saltwater upwelling into the freshwater zone. In other words, the quality and the availability of water from the Chicot Aquifer will not be affected by JISH construction. What other environmental studies has AGL Resources conducted? AGL Resources conducted an environmental report similar to a Federal Environmental Impact Statement. In addition, the Louisiana Department of Environmental Quality has issued a Water Quality Certification as well. One concern voiced by residents is noise. Will more caverns mean more noise? When the gas is put into the caverns, the injection process uses machines called compressors to insert the gas into the caverns. The current compressors do make noise, but in response to concerns from residents, AGL Resources is retrofitting the compressors with baffling to muffle the noise. Technology has improved, so the compressors for the new caverns will operate more quietly. Residents are also concerned about safety. Salt domes have been used in the United States for about 60 years to store natural gas. According to the U.S. Department of Energy, salt caverns storage is safer relative to other storage methods. There have been no incidences of fire, leaks or explosion in caverns developed solely for natural gas storage. In addition, JISH has operated without incident since the existing caverns were first developed in 1994.

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What precautions is AGL Resources taking to make sure that there will not be a repeat performance of the draining of Lake Peigneur? Technology has changed dramatically since 1980, when the incident occurred, and the location of this project deep below the central to northern section of the lake makes it highly unlikely for such an event would occur again. In addition, companies are no longer operating salt mines under Lake Peigneur. Why did AGL Resources sue the State of Louisiana? As a last resort, AGL Resources reluctantly turned to the 19th Judicial District Court in Baton Rouge for declaratory judgment and a preliminary and permanent injunction against the State of Louisiana to ensure JISH's mineral lease at Lake Peigneur remains in full effect. Does the concern over the mineral lease affect JISHs existing operations of caverns 1 and 2? JISHs current operations are not affected. Does this mean the expansion project is dead? No, AGL Resources would like to continue discussions with the office of Gov. Kathleen Blanco and the appropriate state agencies in order to address concerns and to determine next steps. AGL Resources is very responsive to the concerns of the governor and of nearby residents. The company is taking many steps to ensure that all precautions to protect the lake and the environment are met. AGL Resources is convinced that these environmental concerns can be addressed so it can build an expanded facility that would have a significant positive economic impact on the area and on the state of Louisiana. Will AGL Resources meet with residents to discuss their concerns? Yes, representatives fromAGL Resources have met more than six times with public officials, business leaders and residents in Iberia and Vermilion parishes and plan to do so again. The company understands there are concerns and wants to make sure that all concerns are addressed. What is your total planned investment? AGL Resources plans to spend up to $160 million on the expansion project over a five-year period. The company already has obtained some of the required permits for the project, and construction began in late June 2006. How will the project improve the parishes economies? According to an economic impact study conducted by the Center for Business and Economic Research at Louisiana State University, the project is expected to bring an estimated $22 million in new revenues to the parishes and the state. The additional property tax from the improvements to JISH will ultimately total approximately $628,000 a year for Iberia and Vermilion parishes. Vermilion Parish also is expected to receive another $962,000 in sales tax. The expansion will create up to 69 temporary jobs with a total payroll of $5.2 million during the five-year construction phase. Three new permanent jobs will be added at JISH when the caverns go into service. Back to Top

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