August 28, 2003

TransGas Developing Major
Natural Gas Storage Project

In response to economic growth in the Saskatoon area, TransGas today announced the development of a $35 million natural gas storage facility near the town of Asquith.

Learn more about the creation of natural gas storage caverns in this animation outlining the process.

"You need to look no further than this major investment by TransGas to see more evidence of the strength of Saskatchewan's economy," Industry and Resources Minister Eric Cline said, on behalf of Crown Investments Corporation Minister (CIC) Maynard Sonntag. "Industry growth continues to drive demand for more natural gas storage. The number of industrial and residential customers in the Saskatoon region is now responsible for more than 30 per cent of the peak winter natural gas load in our province - a 50 per cent increase over five years ago."

This project reflects additional storage needs of major industrial customers including SaskPower's expansion of the Queen Elizabeth Power Station and the cogeneration facility at the Potash Corporation of Saskatchewan's mine near Cory.

Over the next three years, TransGas will build four large underground salt caverns near Asquith to store natural gas for use during peak winter months. TransGas typically injects gas for customers during the off-peak season in summer to fill its storage facilities located throughout the province. Gas is withdrawn from storage by customers over the winter, particularly during extended cold snaps when the pipeline system is nearing capacity.

"TransGas pioneered North America's first underground salt caverns for natural gas storage in Melville in 1964, and today gas storage is one of our key business lines," said Daryl Posehn, Vice President, TransGas. "While natural gas storage will continue to play a major role in meeting our customers' demands on cold winter days, our storage system is also located at the centre of the North American energy market. We see tremendous potential in the future for a storage system which is located between major gas producing areas to the west and large energy consuming centres in eastern Canada and the United States."

The natural gas storage caverns are created using a technique known as solution mining. This process involves drilling to salt deposits located approximately 3,500 feet beneath the surface. Water is then pumped into the formation to dissolve salt and create a cavern approximately the size of a 12-storey office building. The Saskatoon area has one of the best geological structures for creation of underground storage. Each cavern takes approximately 14 months to create and will hold .8 billion cubic feet (bcf) of natural gas upon completion.

TransGas is the natural gas pipeline transmission and storage subsidiary of SaskEnergy and currently operates 23 caverns located at Landis, Melville, Moosomin, Prud'homme and Regina. The first two caverns in the Asquith Storage Project will be available for use in 2005, with the entire project completed by 2006.

For more information, please contact:

Dave Burdeniuk
Manager, Communications
SaskEnergy/TransGas
Phone: (306) 777-9842