As part of its plan to divest assets that don’t fit its long-term strategy to focus on utility operations, American Electric Power (AEP) will sell its Jefferson Island Storage and Hub LLC to AGL Resources Inc. for $94.3 million.

Jefferson Island Storage and Hub consists of two salt dome gas storage caverns in southern Louisiana, with approximately 9.66 million MMBtu of storage capacity, and two 16-inch header pipelines with eight high-deliverability interconnections.

“This agreement puts us near completion of the process to shed non-core assets so our operational focus — and the focus of our investors — can be on the performance of our strong domestic utilities,” said AEP CEO Michael G. Morris.

AEP acquired the assets when it purchased LIG Pipeline Co. and its subsidiaries in 1998 from Equitable Resources for $320 million. The company has recorded impairments to the combined assets (LIG and Jefferson Island), which reduced the value of the combined assets on AEP’s books to approximately $170 million as of Dec. 31, 2003. AEP completed the sale of LIG Pipeline Co. and its subsidiaries, excluding Jefferson Island, on April 1 to a subsidiary of Crosstex Energy LP for $76.2 million. AEP classified the combined LIG assets as a discontinued operation held for sale during 4Q2003.

The transaction is set to close by Sept. 30, pending regulatory approval. The divestiture will not result in an “significant” impact to earnings, the company said, and proceeds will be used to reduce debt and strengthen the balance sheet.

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