AGL Resources Inc. and El Paso Corp. on Wednesday launched a joint venture (JV) to distribute liquefied natural gas (LNG) across the southeastern United States to the heavy-duty transportation market. LNG deliveries would be available for peak-shaving facilities, as well as for heavy-duty trucks, buses and waste haulers.

The 50/50 JV, Southeast LNG Distribution Co., would own and operate a fleet of LNG-fueled tankers and distribution facilities to support the use of LNG as a fuel source for this emerging market segment.

“This partnership with El Paso will play an important role in expanding the availability of clean-burning, low-cost natural gas as an alternative to diesel fuel for heavy-duty fleet use — including long-haul trucking,” said AGL CEO John W. Somerhalder II, who formerly was at the helm of El Paso’s gas pipeline unit (see Daily GPI, March 31, 2005). He took over as the chief at AGL in early 2006 (see Daily GPI, March 3, 2006).

“As the largest natural gas distribution company in the Southeast based on customer count, AGL Resources is well positioned to construct and operate the distribution facilities necessary to help bring this market opportunity to fruition,” Somerhalder said.

Jim Yardley, president of El Paso’s Pipeline Group, said the two companies “have a unique opportunity to develop this new transportation market by capitalizing on our combined LNG and natural gas infrastructure in the Southeast, our long-time relationship and the expertise in both organizations.”

Southeast LNG would provide distribution facilities and gas supply contracts to both the private and public sectors as the market develops. Bruce H. Hughes was tapped as president of the venture. He has more than 30 years of experience in the gas pipeline industry and most recently served as director of business development with El Paso subsidiary Southern Natural Gas Co. (SNG). Hughes was in charge of helping SNG to develop gas supply and pipeline expansion projects across the southeastern United States.

“Approximately 25% of the nation’s tractor-trailer traffic occurs in the southeastern U.S.,” said Hughes. “We plan to develop infrastructure to fuel and service this market segment with LNG, providing significant environmental and economic benefits.”

AGL, based in Atlanta, also owns Houston-based Sequent Energy Management, one of the top wholesale gas marketers in North America. In addition, it owns and operates Jefferson Island Storage & Hub, a high-deliverability gas storage facility near the Henry Hub in Louisiana.

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