News Release
June 25, 2001

DUKE ENERGY PLANS TO DEVELOP MISSISSIPPI SALT DOME FOR NATURAL GAS STORAGE

HOUSTON – Duke Energy today announced plans to convert an underground salt dome in Copiah County, Miss., into a natural gas storage facility with 3 billion cubic feet (Bcf) of initial storage capacity. The dome can accommodate an additional 6 Bcf of storage capacity.

As early as spring 2004, the new facility could begin providing rapid response fuel storage services for delivery into nearby pipeline systems and provide "moment’s notice" services that are expected to appeal to natural gas-fueled power generation stations.

Upon obtaining all necessary approvals, Duke Energy Gas Transmission’s Market Hub Partners (DEGT/MHP) unit plans to leach one or more caverns from the naturally occurring salt formation to accommodate the storage of natural gas. Above-ground facilities related to cavern development will be required on site as will equipment to ultimately control the compression, injection and withdrawal processes.

"With demand for electricity escalating in the United States, natural gas will be the fuel of choice for power generation," said Gregory Rizzo, vice president of marketing for DEGT and president of MHP. "The high deliverability of salt cavern storage makes the services provided especially appealing to generating stations that often require natural gas be withdrawn at a moment’s notice to help them bring a unit or units on line quickly to meet demand."

MHP expects to file an application with the Federal Energy Regulatory Commission (FERC) this fall seeking permission to develop the cavern or caverns, construct the related on-site equipment and build any pipeline interconnects necessary to make deliveries into existing natural gas systems in the area. Work related to preparing the application, including initial notification of landowners for survey purposes, will begin immediately. Any needed state and/or local approvals will be sought in conjunction with the federal approval.

Several natural gas transmission pipelines lie in close proximity to the site and MHP is evaluating interconnection options to maximize the storage services offered from Copiah.

The decision to proceed with initial development activities follows a successful open season, or invitation period, where potential customers expressed interest in the storage services to be offered. The commitment to proceed with final development of the project will be made once all state and federal regulations have been satisfied.

"Salt cavern storage also can cycle quickly," Rizzo said, "meaning the operator can change from injection of natural gas to withdrawal and back in a matter of minutes.

"That’s an important benefit to those desiring salt cavern storage services not available with traditional, depleted, reservoir storage of natural gas," Rizzo added.

DEGT acquired MHP in 2000. Through that acquisition, DEGT became the largest owner of salt cavern storage facilities in the United States currently having a total storage capacity of 24 Bcf at caverns in Texas and Louisiana. A salt dome site in Tioga County, Pa., also is being considered for development.

"Duke Energy is very active in Mississippi and the Southeast and the Copiah project is the latest example of the company assessing what infrastructure is needed to ensure that our nation’s future energy needs are met," Rizzo said.

Duke Energy’s other operations in Mississippi include the Texas Eastern Transmission, LP, natural gas pipeline; Duke Energy Field Services natural gas pipeline; and Duke Energy North America electricity generating stations.

The first salt cavern used for natural gas storage was constructed in 1970 at Eminence, Miss.

DEGT, the Houston-based Duke Energy business unit responsible for the company’s interstate natural gas pipeline operations, owns and operates 12,000 miles of interstate natural gas pipelines known as Texas Eastern Transmission, LP; Algonquin Gas Transmission Co.; East Tennessee Natural Gas Co.; and with others, owns Maritimes & Northeast Pipeline and the proposed Gulfstream Natural Gas System. Together, these companies transport 8 percent of the natural gas consumed in the United States.

Duke Energy, a diversified multinational energy company, creates value for customers and shareholders through an integrated network of energy assets and expertise. Duke Energy manages a dynamic portfolio of natural gas and electric supply, delivery and trading businesses -- generating revenues of more than $49 billion in 2000. Duke Energy, headquartered in Charlotte, N.C., is a Fortune 100 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available on the Internet at: www.duke-energy.com.

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WHAT IS A NATURAL GAS SALT CAVERN?

Salt caverns are constructed in naturally occurring salt domes, deep underground. Each dome has a unique size and shape, but they can be described as an underground shaft.

These salt caverns serve as ideal storage for natural gas because of their immense size and because the salt acts as a natural sealant, trapping the natural gas inside the cavern.

For storage purposes, a salt cavern is formed by drilling and leaching an underground cavern in a naturally existing salt formation. The typical salt cavern storage consists of a solution mining plant, which provides fresh water to dissolve cavities within the underlying salt, brine handling and disposal facilities, and the necessary surface facilities to compress natural gas into the cavity and allow it to flow back into a pipeline.

Large deposits of salt exist in many areas of the country, with some of the largest being found along the Texas-Louisiana-Mississippi Gulf Coast. In fact, the first salt cavern used for natural gas storage was constructed in 1970 at Eminence, Miss.

Salt has unique properties that make it ideal for storage:

Salt caverns offer high natural gas deliverability, meaning that gas can be withdrawn at a moment’s notice. Additionally, salt cavern storage can cycle quickly – the operator can change from injection to withdrawal in 15 minutes and can change back to injection in 30 minutes.

This speed in service means that salt caverns:

Contact: Gretchen Krueger
Phone: 713/627-4072
24 Hour Phone: 704/382-8333
Email: gdkrueger@duke-energy.com