Cavern Three In Service at Bay Gas Storage.

Cavern Four Construction on Schedule

MOBILE, Ala. -- Bay Gas Storage brought its third underground natural gas storage cavern in service today. The new cavern increases total working gas capacity by 5.4 billion cubic feet (Bcf), bringing total working gas capacity to 11.4 Bcf at the McIntosh, Alabama facility.

The company noted that an additional .4 Bcf capacity was achieved during the development process. Bay Gas Storage had an original planned capacity of 5.0 Bcf for its third cavern. The cavern's original storage capacity was fully contracted in August of 2006.

"Bay Gas Storage provides exceptional deliverability to the Florida market," said Russell Murrell, Vice President Marketing EnergySouth Midstream. "Suppliers and end users balancing supply needs expect responsive and reliable deliverability. Our track record is proven. Bringing cavern three in service strengthens our ability to meet the needs of the marketplace and build on that track record," said Murrell.

In concert with bringing cavern three in service, Bay Gas Storage will begin salt cavern leaching of its fourth underground storage cavern in McIntosh. The development of the company's fourth cavern is the first phase of a planned 10.0 Bcf expansion that will include a fifth cavern at the south Alabama facility. Cavern four has an expected in service date of the first quarter of 2010 and will add 5.0 Bcf of total working gas capacity.

A direct interconnect with Transco pipeline is also under construction to support caverns four and five and will open up the Bay Gas Storage facility to serve Mid-Atlantic and Northeast markets. Construction of the new pipeline is expected to be completed in advance of the cavern four in-service date.

"I am pleased with our midstream team's efforts -- bringing cavern three online, the construction progress on cavern four and the direct pipeline interconnect to Transco," said Dean Liollio, President and Chief Executive Officer EnergySouth, Inc. "This continues our strategy of accelerating the growth of our midstream operations to meet the demands of a growing market," said Liollio.

Approximately 40 miles north of Mobile Bay and northwest of Escambia County, Florida, the company's current direct pipeline interconnects include FGT and Gulf South pipelines with a direct interconnect to Transco under construction. Indirect interconnects include Destin and Gulfstream pipelines.

Bay Gas Storage is a natural gas storage subsidiary of EnergySouth Midstream. (www.esmidstream.com). EnergySouth Midstream is a subsidiary of EnergySouth, Inc. (NASDAQ: ENSI; www.energysouth.com). EnergySouth, Inc. is the parent company of a group of energy-related subsidiaries operating in the storage and distribution segments of the natural gas industry.