Aquila has purchased the proposed Red Lake Storage Project from Southwest Gas Corp. for an undisclosed sum. The deal includes 36,000 acres about 30 miles north of Kingman, AZ, and the rights to develop a salt cavern gas storage facility. Along with the land, Aquila purchased the water and mineral rights necessary to develop the facility.

It will have a gas storage capacity of 12 Bcf. The first phase of the project is expected to provide 6 Bcf of capacity by the fourth quarter of 2003, with the full 12 Bcf planned for the fourth quarter of 2004. The facility will connect to pipelines operated by El Paso Natural Gas Pipeline and Transwestern Pipeline Co. Aquila anticipates beginning an open season for the facility within the next seven to 10 days.

“This facility fits with our strategy to build or acquire assets that enable us to provide clients with the energy they need when they encounter dramatic increases in demand,” said Aquila COO Ed Mills.

The facility is positioned to serve Arizona power plants, as well as other facilities in Nevada and California. There are 60 gas-fired power plants in Arizona, representing one of the largest single concentrations of such facilities in the United States

Aquila currently owns the 21 Bcf Katy Storage Hub in East Texas. It also is completing the acquisition of a storage facility near Lodi, CA, which will provide services to northern California.

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