Private Investors Buy Bankrupt Avoca
Northeastern Gas Caverns LLC, a New York company, has purchased
all the salt cavern drilling rights, licenses and equipment owned
by the bankrupt Avoca Natural Gas Storage Co. for $8 million,
promising to revive the project, once highly touted as the first
high-deliverability salt cavern storage in the Northeast. NGC also
has agreed to assume a portion of Avoca's secured debt.
Avoca filed for bankruptcy in May 1997 after it failed to find
an acceptable way to dispose of the brine that is a byproduct of
leaching the underground salt to form the storage caverns. The
initial deep brine disposal wells drilled by Avoca did not have
enough permeability and were able to take only 25% of the brine.
Another scheme to run a pipeline to a Watkins Glen, NY salt plant
also fell through. Observers say there currently is a glut in the
market for salt, which makes disposal only slightly less difficult
than more toxic wastes.
Texas and Louisiana, where much of the nation's salt cavern
storage is located, border the saltwater Gulf of Mexico so disposal
is not a problem. Inland in New York State, environmentalists and
fishermen have campaigned to keep the salt brine out of local
freshwater streams and the water table.
The new owners, a private company represented by Leonard "Buzz"
Nave, a Kentucky attorney and Shawn Griffin, a New York attorney,
have not said how they will deal with the disposal problem. The
attorneys said the new owners are private investors, not affiliated
with any energy companies.
Avoca had been backed by Dynegy, Bechtel and PG&E's US
Generating, and Equitable Resources. The partners and banks had
sunk a total of $80 million into the project by the time Avoca
filed for Chapter 11. At the time the company listed $56 million in
The Avoca project is in southwestern New York State near the
border with Pennsylvania and not far from another highly touted
salt cavern storage project, Tioga Gas Storage, also called the
Northeast Hub. The latter has been planned by Market Hub Partners,
whose 66% owner, Houston-based TPC Corp., was recently acquired by
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