Falcon's MoBay Storage Hub Accepts FERC Certificate, Announces Open Season for Remaining Capacity.

HOUSTON -- The Federal Energy Regulatory Commission (FERC) has issued a Certificate of Public Convenience and Necessity under Section 7 of the Natural Gas Act authorizing MoBay Storage Hub LLC to develop and operate the MoBay Storage Hub Project in Southern Alabama.

The MoBay Storage Hub will provide 50 Bcf of working gas and 1.0 Bcfd of injection and withdrawal capacity at Coden, Alabama. The MoBay header system will provide direct, bi-directional receipt and delivery points with the Florida Gas Transmission (FGT) pipeline (Zone 3), Gulfstream pipeline, Gulf South pipeline (Zone 4) and Transco pipeline (Zone 4A). Via backhaul or displacement, MoBay shippers will be able to access the expanded Destin pipeline system.

MoBay will offer firm and interruptible storage, balancing, wheeling, parking and loaning services at market based rates. Future receipt points may include the four gas processing plants at Coden (1.3 Bcfd) and the proposed 1.14 Bcfd Southeast Supply Header (SESH) project planned to connect with the Gulfstream, FGT, Gulf South, Southern Natural Gas Company (SONAT), Columbia Gulf Transmission (Columbia Gulf), Centerpoint Energy Gas Transmission (CEGT), Texas Eastern Transmission (TETLP) and Tennessee Gas pipelines.

The MoBay hub is expected to create a major new market center for natural gas in the Gulf Coast region and is designed to provide secure natural gas supplies during extreme weather events and other deepwater supply disruptions.

Specifically, the FERC order authorizes MoBay to construct and operate a natural gas storage hub and associated pipeline facilities consisting of:

* Three underground substantially depleted natural gas storage reservoirs located offshore in Alabama state waters

* Up to 30 new injection and withdrawal wells supported by 10 offshore caissons and approximately seven miles of offshore distribution pipeline connecting the injection and withdrawal wells to two existing offshore platforms

* An onshore compressor station with 37,880 horsepower (HP) of compression

* Three metering stations and approximately three and a half miles of 24-inch diameter pipelines, creating a header system connecting the onshore facilities to four nearby interstate natural gas pipelines

* Two 8,500 HP compressor units located offshore on a platform owned by MoBay

* A 36-inch diameter pipeline, about 15.5 miles, connecting the storage reservoirs to the onshore compressor station

"MoBay appreciates the Commission's efficient processing of its application and recognition of the MoBay project as an important new market hub in the Southeast," said Edmund Knolle, MoBay chief operating officer. "By 2010, natural gas demand in the Southeastern U.S. is expected to increase 16% over 2004 demand. Gas demand in Alabama alone is expected to increase by 50% during the same period. MoBay will significantly enhance energy security and reliability in this growing region, providing utilities, producers, LNG importers, gas marketers and industrials with a strategically located, highly liquid trading hub downstream of major pipeline bottlenecks."

MoBay has executed precedent agreements with six shippers for 18.3 Bcf of working gas capacity and 0.575 Bcfd of daily withdrawal capability. Shippers include electric utilities, producers, marketers and municipal gas districts. MoBay plans to hold a non-binding open season in February.

Already receiving air and water quality permits from the Alabama Department of Environmental Management (ADEM), MoBay expects to finalize remaining federal and state permitting requirements by the end of the first quarter and start construction in April 2007. The target in-service date is April 1, 2008.

About Falcon Gas Storage Company, Inc.

Through its wholly-owned subsidiaries and affiliated companies, Houston-based Falcon Gas Storage Company is one of the largest independently owned developers and operators of high-deliverability, multi-cycle (HDMC) natural gas storage capacity in the United States. Falcon's NorTex Gas Storage Company subsidiary owns and operates more than 27 Bcf of working gas storage capacity and 750,000 Mcfd of deliverability at its Hill-Lake and Worsham-Steed gas storage facilities, as well as 450,000 Mcfd of gas transportation capacity, serving Dallas/Ft. Worth and the Waha and Carthage Market Hubs. Through its MoBay Storage Hub LLC affiliate, Falcon also is developing an HDMC gas storage project in southern Alabama, which will have up to 50 Bcf of working gas capacity and 1.0 Bcfd of injection and withdrawal capacity. Falcon's subsidiaries also are involved in crude oil production, including enhanced oil recovery, and natural gas liquids production and gas processing in North Texas. Visit Falcon at: www.falcongasstorage.com.