Commodity trading powerhouse Mercuria said it is investing in Black Bayou Energy Hub LLC, a large-scale underground salt dome natural gas storage project under development in Louisiana’s Cameron and Calcasieu parishes.
The facility near the Texas border is slated to begin commercial operation by early 2028. Black Bayou noted that it initially was given a certificate in 2008 by the Federal Energy Regulatory Commission.
"Mercuria's investment in Black Bayou Energy Hub represents a significant step toward enhancing the resilience and flexibility of our energy infrastructure,” said Mercuria’s Boris Bystrov, managing director of investments. “This partnership leverages Mercuria's robust financial capabilities and extensive expertise in commodity markets, aligning with Black Bayou's strategic location and development potential.”
Black Bayou would initially focus on federally regulated natural gas storage, according to its sponsors. The announcement follows those by other companies that want to expand Gulf Coast gas storage.
"We are committed to supporting innovative projects like Black Bayou essential for transitioning to a sustainable global energy future,” Bystrov added. “Together, we aim to create a storage solution that addresses the dynamic needs of the energy sector, fostering stability and growth in the U.S. Gulf Coast region and beyond."
The project has one binding firm commitment in place for 8 Bcf of capacity for a 10-year term, Black Bayou’s Dan Craig, chief commercial officer, told NGI. Additionally, the firm launched an open season this month with results expected by month’s end. “From there, we expect to contract further firm customer commitments,” he added.
Rising Gulf Coast Consumption
Craig said demand for natural gas storage capacity is greatest in the Gulf Coast region, “specifically for high turn, salt storage,” Craig said. “This is because salt storage properties allow capacity holders to inject and withdraw gas at a higher rate than other types of storage like reservoir storage.
“Additionally, most of the underground salt domes are located in the Gulf coast area, which is in close proximity to the largest natural gas demand growth component: LNG liquefaction and export.”
Craig said “supply and demand for natural gas has grown over the past decade,” but “the amount of storage has not meaningfully increased – in fact it’s barely changed at all. This growth in natural gas demand has resulted in a higher utilization of the existing natural gas infrastructure, which in turn has led to an increase in price volatility as slack in the system has disappeared.”
Mercuria highlighted the project’s location, “seven miles east of the Louisiana/Texas border, 18 miles north of the Gulf of Mexico coastline, and less than 25 miles on either side from the growing demand centers of Lake Charles, LA, and Port Arthur, TX.
It also highlighted liquefied natural gas opportunities.
“The project is centrally located in the heart of the U.S.'s rapidly growing ‘LNG Alley,’ which will include up to 10 or more export terminals and over 30 Bcf/d of existing and proposed LNG liquefaction capacity.”
Mercuria management said Black Bayou would have the ability “to provide storage and wheeling services to a wide range of energy consumers and suppliers, helping to balance the ever-changing needs of a dynamic global energy market.”
U.S. natural gas storage inventories were 25% above historical averages as of the end of May. The supply glut has kept Henry Hub prices well below $3/MMBtu all year, NGI data show.
