Blue Sky Gas Storage, LLC; Notice of Intent To Prepare an Environmental Assessment for the Proposed Blue Sky Gas Storage Project and Request for Comments on Environmental Issues

June 26, 2009.

The staff of the Federal Energy Regulatory Commission (FERC or Commission) will prepare an environmental assessment (EA) that will discuss the environmental impacts of the Blue Sky Gas Storage Project involving the construction and operation of facilities by Blue Sky Gas Storage, LLC (Blue Sky) in Logan County, Colorado. The Blue Sky Gas Storage Project involves the conversion of a depleted natural gas storage reservoir to a natural gas storage facility. This EA will be used by the Commission in its decision-making process to determine whether the project is in the public convenience and necessity.

This notice announces the opening of the scoping process we will use to gather input from the public and interested agencies on the project. Your input will help determine which issues need to be evaluated in the EA. Please note that the scoping period will close on July 27, 2009.

This notice is being sent to the Commission's current environmental mailing list for this project, which includes affected landowners; Federal, State, and local government representatives and agencies; elected officials; environmental and public interest groups; Native American tribes; parties to this proceeding; and local libraries and newspapers. State and local government representatives are asked to notify their constituents of this proposed project and to encourage them to comment on their areas of concern.

If you are a landowner receiving this notice, you may be contacted by a pipeline company representative about the acquisition of an easement to construct, operate, and maintain the proposed facilities. The company would seek to negotiate a mutually acceptable agreement. However, if the project is approved by the Commission, that approval conveys with it the right of eminent domain. Therefore, if easement negotiations fail to produce an agreement, the pipeline company could initiate condemnation proceedings in accordance with State law.

A fact sheet prepared by the FERC entitled “An Interstate Natural Gas Facility On My Land? What Do I Need To Know?” was attached to the project notice Blue Sky provided to landowners. This fact sheet addresses a number of typically asked questions, including the use of eminent domain and how to participate in the Commission's proceedings. It is available for viewing on the FERC Web site ( http://www.ferc.gov ).

Summary of the Proposed Project

Blue Sky proposes to convert a depleted underground natural gas production reservoir to a natural gas storage facility located approximately 16 miles north of the town of Sterling, in Logan County, Colorado. Blue Sky also proposes to construct 5.3 miles of 16-inch-diameter header pipeline extending north from the storage facility to interconnect with Rockies Express Pipeline, LLC, and Trailblazer Pipeline, LLC's interstate pipeline systems. In addition, Blue Sky proposes to construct 9.8 miles of 16-inch-diameter header pipeline extending southwest to interconnect with Kinder Morgan Interstate Gas Transmission, LLC's interstate pipeline system. Blue Sky would construct one metering station at each of the two proposed interconnections. The Blue Sky Storage Project would have a working gas storage capacity of approximately 4.4 billion cubic feet and be capable of delivering gas at a rate of approximately 100 million cubic feet per day (MMcf/d).

Activities at the storage facility would include:

• Drilling 10 new natural gas storage wells;
• Converting one existing well to a water disposal well;
• Converting two abandoned wells to observation wells;
• Re-entering 18 abandoned exploration and production wells to confirm proper plugging and abandonment; and
• One 2,370 horsepower compressor station.

High West Energy would construct and operate a non-jurisdictional electrical distribution line upgrade and extension. To service the Blue Sky facilities, a one mile new section of new electrical distribution line would be built eastward of the existing electrical distribution line across County Road 33 into the Blue Sky facility.

Maps showing the location of the proposed project are included as appendix 1.

Land Requirements for Construction

The proposed storage facility would occupy a subsurface area of about 2,757 acres. Construction of the proposed facilities would temporarily disturb a total of 263.7 acres of land for the aboveground facilities and the pipeline. Following construction, about 36.1 acres would be maintained for permanent operation of the project's facilities; the remaining acreage would be restored and allowed to revert to former uses.

The EA Process

The National Environmental Policy Act (NEPA) requires the Commission to take into account the environmental impacts that could result from an action whenever it considers the issuance of a Certificate of Public Convenience and Necessity. NEPA also requires us to discover and address concerns the public may have about proposals. This process is referred to as “scoping.” The main goal of the scoping process is to focus the analysis in the EA on the important environmental issues. By this notice, the Commission staff requests public comments on the scope of the issues to address in the EA. All comments received will be considered during the preparation of the EA.

In the EA, we will discuss impacts that could occur as a result of the construction and operation of the proposed project under these general headings:

• Geology and soils;
• Land use;
• Water resources, fisheries and wetlands;
• Cultural resources;
• Vegetation and wildlife;
• Air quality and noise;
• Threatened and endangered species; and
• Public safety.

We will also evaluate possible alternatives to the proposed project or portions of the project, and make recommendations on how to lessen or avoid impacts on various resource areas.

Our independent analysis of the issues will be in the EA. Depending on the comments received during the scoping process, the EA may be published and mailed to those on our environmental mailing list (see discussion on how to remain on our environmental mailing list on page 5). A comment period will be allotted for the review if the EA is published. We will consider all comments on the EA before we make our recommendations to the Commission. To ensure your comments are considered, please carefully follow the instructions in the public participation section below.

With this notice, we are asking agencies with jurisdiction and/or special expertise with respect to environmental issues to formally cooperate with us in the preparation of the EA. These agencies may choose to participate once they have evaluated the proposal relative to their responsibilities. Agencies that would like to request cooperating agency status should follow the instructions for filing comments provided under the Public Participation section of this notice.

Currently Identified Environmental Issues

We have already identified issues we think deserve attention based on a preliminary review of the proposed facilities and the environmental information provided by Blue Sky. This includes potential cumulative impacts associated with another storage project in the same general area of Logan County that has been proposed by East Cheyenne Gas Storage, LLC (docket number PF09-12).

Public Participation

You can make a difference by providing us with your specific comments or concerns about the project. Your comments should focus on the potential environmental effects, reasonable alternatives, and measures to avoid or lessen environmental impacts. The more specific your comments, the more useful they will be. To ensure that your comments are timely and properly recorded, please send in your comments so that they will be received in Washington, DC on or before July 27, 2009.

For your convenience, there are three methods which you can use to submit your comments to the Commission. The Commission encourages electronic filing of comments and has dedicated eFiling expert staff available to assist you at 202-502-8258 or eFiling@ferc.gov.

(1) You may file your comments electronically by using the Quick Comment feature, which is located at http://www.ferc.gov under the link called “Documents and Filings”. A Quick Comment is an easy method for interested persons to submit text-only comments on a project;

(2) You may file your comments electronically by using the eFiling feature, that is listed under the “Documents and Filings” link. eFiling involves preparing your submission in the same manner as you would if filing on paper, and then saving the file on your computer's hard drive. You will attach that file as your submission. New eFiling users must first create an account by clicking on “Sign up” or “eRegister.” You will be asked to select the type of filing you are making. A comment on a particular project is considered a “Comment on a Filing;” or

(3) You may file your comments with the Commission via mail by sending an original and two copies of your letter to:

Kimberly D. Bose, Secretary, Federal Energy Regulatory Commission, 888 First Street, NE., Room 1A, Washington, DC 20426.

In all instances please reference the project docket number (CP09-428-000) with your submission. Label one copy of the comments for the attention of Gas Branch 1, PJ-11.1.

Environmental Mailing List

An effort is being made to send this notice to all individuals, organizations, and government entities interested in and/or potentially affected by the project. This includes all landowners who are potential right-of-way grantors, whose property may be used temporarily for project purposes, or who own homes within certain distances of the aboveground facilities (as defined in the Commission's regulations).

If you do not want to send comments at this time but still want to remain on the environmental mailing list, please return the Information Request (appendix 2). If you do not return the Information Request, you will be taken off the mailing list.

Becoming an Intervenor

In addition to involvement in the EA scoping process, you may want to become an “intervenor,” which is an official party to the Commission's proceeding. Intervenors play a more formal role in the process and are able to file briefs, appear at hearings, and be heard by the courts if they choose to appeal the Commission's final ruling. An intervenor formally participates in a Commission proceeding by filing a request to intervene. Instructions for becoming an intervenor are included in the User's Guide under the “e-Filing” link on the Commission's Web site.

Additional Information

Additional information about the project is available from the Commission's Office of External Affairs, at 1-866-208-FERC or on the Internet at http://www.ferc.gov using the “eLibrary” link. Click on the eLibrary link, then on “General Search” and enter the docket number excluding the last three digits (i.e., CP09-428) in the Docket Number field. Be sure you have selected an appropriate date range. For assistance, please contact FERC Online Support at FercOnlineSupport@ferc.gov or toll free at 1-866-208-3676, or for TTY, contact (202) 502-8659. The eLibrary link also provides access to the texts of formal documents issued by the Commission, such as orders, notices, and rulemakings.

In addition, the Commission offers a free service called eSubscription which allows you to keep track of all formal issuances and submittals in specific dockets. This can reduce the amount of time you spend researching proceedings by automatically providing you with notification of these filings, document summaries and direct links to the documents. Go to http://www.ferc.gov/esubscribenow.htm.

Finally, any public meetings or site visits will be posted on the Commission's calendar located at http://www.ferc.gov/EventCalendar/EventsList.aspx along with other related information.