This is just step .01 of about a 1,000-step journey — City Manager Matt Geisel
The New Mexico Gas Company is proposing to build a liquefied natural gas (LNG) storage facility at Quail Ranch — about 2 miles north of Double Eagle II Airport — in Rio Rancho to serve as a storage site for natural gas that ultimately would be used by its customers.
“This project will enhance our ability to deliver reliability and security of supply over to our customers over the long-term,” said Gerald Weseen, NMGC vice president of regulatory, strategy and external affairs.
Weseen presented the project to the Rio Rancho Governing Body Tuesday.
“This is just step .01 of about a 1,000-step journey,” City Manager Matt Geisel said.
The company’s natural gas plant currently sits in West Texas, but the company wants to move to Rio Rancho because of its proximity to New Mexico Gas Company’s distribution system and nearby power infrastructure.
The company purchased 160 acres at Quail Ranch. Of that, 20 acres would be used for the plant.
The rest of the land would be used as a buffer zone for safety and prevent future encroachment, said Curtis Winner, NMGC director of project management and applications.
The facility would employ more than 100 people in the construction phase and six to eight people when it is operational. It would include an LNG storage tank that can hold about 1 billion cubic feet of liquefied natural gas.
The LNG storage facility will have a liquefaction facility onsite.
“This means gas would be transported to the facility in its regular gaseous state and then liquefied for storage,” NMGC spokesman Tim Korte told the Observer. “The reason gas is converted is because the liquefaction process shrinks the volume of natural gas by about 600 times, and this will provide storage of a larger amount of gas in a limited area. When the gas is needed, it is warmed back to a gaseous state and then returned to the distribution system for customer use.”
The potential cost for customers is still being determined, according to a company information sheet, “but the intent is that it will cost customers nothing additional since the price will be offset by the value of current contracts for leased underground storage in West Texas, which will no longer be needed after the LNG storage facility is in operation.”
For several years the company leased underground salt domes in West Texas for natural gas storage.
“Although the cost of the proposed LNG facility is still being determined, we anticipate that it will be generally comparable to the value of our existing storage contracts,” Korte said. “Additionally, those contracts are set to expire around the same time we hope to bring the LNG facility online, so there should be no net change to the cost for storage.”
Reliability and safety
The New Mexico Gas Company pitched an idea to build a natural gas plant in the Rio Rancho city limits about 10 years ago, but it later withdrew its application.
Councilor Paul Wymer said he was surprised by the company’s decision to return to the city after that many years.
Since 2012, the company has invested in several capital infrastructure projects that “improved the safety and reliability of our distribution system across New Mexico,” Korte said.
“After the February 2021 winter weather event and the resulting impact to natural gas prices, the New Mexico Public Regulation Commission directed NMGC to evaluate potential measures to increase access to stored gas, and our current efforts are in response to that request,” he said.
The company will return to the governing body in the fall to seek approval of a resolution supporting the project. It will then apply for a certificate of public convenience and necessity to the state Public Regulation Commission.
If it is approved, construction could begin in 2024 with the facility starting operations in late 2026.