News Release
October 07, 2004

DUKE ENERGY GAS TRANSMISSION PRESENTS INVESTIGATION FINDINGS OF AUGUST MOSS BLUFF STORAGE FACILITY INCIDENT: SERIES OF UNUSUAL EVENTS BASIS FOR NATURAL GAS RELEASE AND FIRE

HOUSTON – Duke Energy Gas Transmission (DEGT) today presented the results of its investigation into the cause of the August 2004 well control incident and natural gas fire at the company’s Moss Bluff Hub Partners storage cavern #1 in Liberty County, Texas, to the Railroad Commission of Texas staff in Austin. The commission has regulatory oversight of the facility.

Facility Background
The 640-acre Moss Bluff storage facility is primarily comprised of three separated underground caverns leached out of a naturally occurring salt formation beneath the surface; a compressor station to help move natural gas into and out of the caverns; well head assemblies on each of the caverns for operational control purposes; and natural gas, fresh water and salt water (brine) piping and related facilities to facilitate transportation and/or holding of those materials. 

Prior to the Aug. 19 incident, storage cavern #1 was operating in normal “de-brining” mode where brine is withdrawn from the cavern as gas is injected. Brine is brought to the surface through an 8 5/8-inch well string and transported to an above-ground holding pond. Up to the time of the incident, no unusual events occurred in the de-brining process and operator reports indicate that the system was performing normally.

For information including illustrations of the wellhead assembly, well string and cavern, a profile view of cavern #1 and the investigation report’s executive summary page, please go to www.duke-energy.com and click on the Moss Bluff update information.

Investigation Results
A detailed investigation by company personnel and supported by outside consultants determined that a series of unusual events was the basis for the uncontrolled gas release and fire at Moss Bluff storage cavern #1 beginning Aug. 19.

The series of unusual events in order involved:   separation of the 8 5/8-inch well string inside the cavern; the breach of the 8-inch brine piping above ground; and the separation of the wellhead assembly above the cavern.

Well String Event
The investigation determined that the initiating event in the Aug. 19 incident was a separation of the 8 5/8-inch well string inside the cavern at or above the 3,724 feet level. The reason for this breach event is unknown and the affected materials are not recoverable from the cavern.

The evidence indicates that, as recently as 10 days prior to the incident, the 8 5/8-inch well string showed no signs of a separation that would ultimately have resulted in gas entering the above-ground brine piping during de-brining operations.

Brine Piping Event
When the brine level reached the point where the 8 5/8-inch well string had separated, gas under pressure was able to enter the string, reach the surface and flow into the 8-inch above ground brine piping. The emergency shutdown (ESD) system in place on the 8-inch brine piping off the wellhead assembly operated properly and closed with the detection of a change in pressure, flow and/or composition.

The resulting mechanical forces or “water hammer” produced by the sudden surge of flow caused the 8-inch piping between the wellhead and the ESD valve to breach. The breach occurred at a location in the piping that had general wall loss due to internal corrosion.

The extent of the internal corrosion of the brine piping was not expected due to the relatively short period of time it had been in service (installed and tested in 2000). The breach in the 8-inch, above-ground brine piping just west of the wellhead initially fueled the fire. Due to the location of the breach, the gas release and fire were directed downward at the base of the wellhead.

Wellhead Event
Early Friday, August 20, the entire wellhead assembly separated from the casings due to the extreme radiant heat and was ejected to the side. The fire self-extinguished for a brief period of time (approximately 28 seconds). Gas then began escaping vertically through the 20-inch production casing.

Other Considerations
Operating procedures were reviewed and found to be adequate and appropriately followed. Valve positions were confirmed and found to be correct. A thorough review of operator logs and employee interviews did not reveal evidence that procedural or human error contributed to the event.

The Moss Bluff facility is manned by trained personnel around the clock, and no unusual circumstances or trespass activities were noticed on the night of the event or during the days leading up to it.

A complete review of the facility was conducted to determine the extent of the damage caused directly by the gas release and fire or indirectly by the heat of the flame. Very little impact of the incident is evident on subsurface facilities. The inspection has been completed, and the damage to the above-ground facilities has been or will be repaired.

Event Recap and additional background
Early Aug. 19, 2004, a well control incident occurred at the Moss Bluff Hub Partners salt cavern storage facility in Liberty County, Texas, that resulted in an uncontrolled gas release and fire at storage cavern #1. Over a period of six and one-half days, the approximately 6 billion cubic feet of natural gas in the cavern was released and burned. The fire eventually self-extinguished, and late on Aug. 26, installation of a blowout prevention valve was completed, effectively placing the well back under control.

Throughout the duration of the event, the fire was above ground. The top of storage cavern #1 is approximately 2,500 feet below the surface and the cavern itself is about 1,400 feet deep.

Duke Energy Gas Transmission is a North American leader in developing energy infrastructure and connecting major natural gas supply basins to growing markets. The company’s natural gas operations include more than 17,500 miles of transmission pipeline and about 250 billion cubic feet of storage capacity in Canada and the United States. More information on DEGT can be found at:  http://www.duke-energy.com/businesses/companies/degt.asp.

Duke Energy is a diversified energy company with a portfolio of natural gas and electric businesses, both regulated and unregulated, and an affiliated real estate company. Duke Energy supplies, delivers and processes energy for customers in North America and selected international markets. In 2004, the company celebrates a century of service with the 100th anniversary of its electric utility Duke Power. Headquartered in Charlotte, N.C., Duke Energy is a Fortune 500 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available on the internet at: http://www.duke-energy.com.

Contact: Frances Jeter
Phone: 713/627-5504
24-Hour Phone: 704/382-8333
e-mail: fhjeter@duke-energy.com