AGL Resources said Friday that it has completed the $90.3 million acquisition of Jefferson Island Storage & Hub, LLC from an American Electric Power (AEP) subsidiary. The storage facility is located in Erath, Vermilion Parish, LA, approximately eight miles from the Henry Hub.

The deal, first announced in early August (see NGI, Aug. 16), was part of AEP’s plan to divest assets that do not fit in with its long-term strategy of focusing on utility operations.

The price of $90.3 million includes approximately $9 million of working gas inventory and was adjusted during closing from the previously announced price of $94.3 million. AGL Resources’ business development arm, Pivotal Energy, will be responsible for the day-to-day operation of the facility, and immediately will begin taking requests for firm and interruptible storage and hub services. The company noted that it currently has available firm capacity for lease.

Jefferson Island Storage & Hub consists of two salt dome gas storage caverns with 9.9 million Dth of total capacity, and about 7.3 million Dth of working gas capacity. The facility has approximately 720,000 Dth/d withdrawal capacity and 240,000 Dth/d injection capacity.

“As AGL Resources continues to expand its business, it is more important than ever to insure we invest in strategic assets that provide us with significant flexibility and the opportunity to offer reliable service,” said Kevin P. Madden, executive vice president of distribution and pipeline operations. “Jefferson Island is a high-deliverability facility which is geographically very well located, and with the capacity to cycle inventory multiple times over the course of the year. The facility also has the capacity for future expansion.”

AEP combined the Jefferson facility with other assets and classified them as a discontinued operation held for sale during the fourth quarter of 2003. The company reported that the divestiture of the facility will not result in any significant impact to earnings for AEP. Proceeds from the sale will be used to reduce debt and strengthen the balance sheet.

Expanding upon the facility’s prime location, AGL said that Pivotal’s Jefferson Island system provides for storage and hub services through its direct connection to the Henry Hub via Sabine Pipeline, and its interconnection with seven other pipelines: Texas Gas Transmission, Columbia Gulf Transmission, Sea Robin Pipeline, Tennessee Gas Pipeline, Gulf South Pipeline, Natural Gas Pipeline Co. of America and Crosstex Energy (formerly Louisiana Interstate Gas pipeline).

For more information or to bid on the facility’s firm or interruptible service, contact Pivotal Energy Development at 832-397-1777, or lmarshal@aglresources.com.

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