American Electric Power (AEP) late Friday completed its acquisition of the Bammel storage reservoir near Houston and related natural gas pipeline and compressor assets from Enron Corp. for $115 million.

AEP and Enron announced a settlement agreement in April related to AEP’s 30-year pre-paid lease arrangement for Bammel that was entered into in June 2001 when AEP purchased Houston Pipe Line Co. from Enron (see Daily GPI, April 29) . Enron filed bankruptcy six months after the lease arrangement, and the lease became part of the bankruptcy proceedings. The settlement agreement was approved by the bankruptcy court overseeing Enron’s case in September.

In this transaction, AEP acquires, among other things, all of Enron’s interests in the 7,000-acre underground Bammel storage reservoir, the related Bammel Loop, Texas Loop and Houston City Loop pipelines, appurtenant wells, compressors and other equipment, and 10.5 Bcf of natural gas in the Bammel storage reservoir. AEP and Enron mutually released the other from all claims associated with Bammel and the related assets. The parties’ respective trading claims are not covered under this settlement.

Houston Pipe Line includes approximately 4,000 miles of natural gas intrastate and gathering pipelines.

The settlement does not cover AEP’s lawsuit in Texas federal court against Bank of America claiming fraud, breaches of contractual covenants and negligent misrepresentations by Bank of America in connection with AEP’s purchase of the Houston Pipe Line stock, the Bammel storage lease and related contractual agreements (see Daily GPI, Nov. 25, 2003). Bank of America claims a security interest in approximately 55 Bcf of cushion gas purportedly in the Bammel storage reservoir.

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