California regulators Thursday approved with conditions the sale of ArcLight Capital Partners’ merchant Lodi Gas Storage LLP in northern California to a Pennsylvania-based energy holding partnership, Buckeye Partners LP.

Conditions of the sale mostly guard against any sharing of information between Lodi and another merchant storage operation that previously had ties to Buckeye — Wild Goose Storage LLC, the state’s first independent underground natural gas storage facility developed a decade ago.

In July Buckeye said it was buying the Lodi facility from ArcLight for $440 million. The sale included ArcLight finishing a pending application for expanding the storage facility through a project called Kirby Hills Phase II. Kirby Hills is an expansion facility 45 miles west of the Lodi storage project. Together the projects represent 22 Bcf of working capacity, with interconnections to the Pacific Gas and Electric Co. (PG&E) backbone transmission pipeline system.

The California Public Utilities Commission (CPUC) Division of Ratepayer Advocates (DRA), originally opposed the sale until a settlement with five conditions was reached in November and filed with the CPUC.

Settling parties agreed that “there shall be no exchanges of sensitive market information with Wild Goose, which is controlled by the same entity that used to control Buckeye indirectly,” the CPUC said. “Parties shall not permit a commonality of interest to develop between Lodi Gas Storage and Wild Goose by having partners or affiliates with overlapping directors, etc., and shall report any acquisition by any Lodi Gas or Buckeye affiliate of any controlling interest in any gas or electric-related venture in California or Western North America that is not already subject to the state public utility code.”

The CPUC also required Buckeye and its affiliates to “give first priority” to Lodi’s capital needs. Buckeye Partners formed subsidiary Buckeye Gas Storage LLC to acquire membership interests in the Lodi operations.

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