Salt Lake City-based Questar Corp. officials reiterated on a quarterly earnings call Thursday their intention to sell the 488-mile Southern Trails natural gas pipeline, extending from the Blanco Hub in New Mexico to just inside California.
The company is continuing on this path in the midst of its acquisition by Virginia-based power company Dominion Resources Inc. (see Daily GPI, Feb. 1).
Through subsidiaries, Questar owns and operates the Overthrust Pipeline in southwestern Wyoming and Southern Trails, along with a 50% owner/operator interest in the White River Hub, providing transportation and hub services through interconnections with six interstate pipeline systems and a major processing plant near Meeker, CO.
Michael Dunn, executive vice president heading the Questar pipeline operations, said the intention is to sell Southern Trails by the end of the second quarter this year. "If we're unable to execute an appropriate sale, we'll continue to operate the asset as a gas pipeline as we're required to do by FERC."
If it is unable to find a suitable buyer, Dunn said Questar will re-evaluate it options, and continuing to operate the pipeline would be one of them, as would be continuing to pursue a sale.
"In addition, obviously, we could evaluate whether to shut down the pipeline, but the sales route is the one we will continue to pursue first." Dunn said.
Questar originally acquired the oil-to-gas pipeline more than a decade ago and began operating it as a gas line from the Blanco Hub to California (see Daily GPI, July 11, 2002). In 2008 it sold a 45.5-mile segment of Southern Trails' inactive 209-mile West Zone facilities to Sempra Energy's Southern California Gas Co. (see Daily GPI, Jan. 9, 2008).
Currently, Southern Trails has a total transportation capacity of 80 MMcf/d and interconnects with several major pipelines serving the region. Last year, Questar Pipeline announced it had "terminated plans to recommission the western segment of the Southern Trails Pipeline as a crude-oil transport pipeline," and started the process to divest the asset with the objective of selling it by the end of this year.
For 1Q2016, Questar overall reported net income of $78.5 million (45 cents/share), compared with $84.6 million (48 cents) for the same period last year. Excluding $9 million in one-time charges related to the Dominion acquisition, Questar's adjusted earnings were $87.5 million (50 cents) for 1Q2016.