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Citizens Energy Sells LNG Business Unit to Private Equity Firm

Indianapolis-based utility holding company Citizens Energy Group recently closed the sale of its liquefied natural gas (LNG) supply unit, Kinetrex Energy, to Chicago and Vancouver, BC-based Parallel49 Equity Fund. Terms of the sale were not disclosed.

A Citizens spokesperson told NGI that Kinetrex is on the verge of a growth spurt, and Citizens could not provide the added capital that the LNG supplier needs to "fill the void for LNG in the Midwest."

In announcing its latest acquisition, Parallel49 described Kinetrex Energy as a leading LNG supplier in the Midwest, operating two production facilities, each with 1 Bcf of storage capacity, in the Indianapolis area. A five-year-old creation of Citizens Energy, Kinetrex serves customers in the transportation, commercial, industrial, agricultural and power generation sectors.

"Kinetrex designs, markets and implements a portfolio of LNG, pipeline natural gas, and renewable natural gas (RNG) energy solutions," said the Citizens' spokesperson. The company can produce up to 240,000 LNG gallons daily with total storage capacity of 24 million gallons, transporting up to 1 million LNG gallons/d by truck and 2.15 million gallons daily through vaporization and pipeline transport.

"In order to expand, Kinetrex needs capital funds to continue its growth and maximize its already strong market position. Citizens is not in a financial position to adequately provide this capital funding."

In addition, the spokesperson said Kinetrex is well positioned to be successful in gas marketing, which is a business Citizens recently exited because it did not fit with its business strategy.

Although it doesn't have any other energy investments now, Parallel49 generally invests in "profitable, well-managed, middle-market companies in the specialty manufacturing, business services and value-added distribution industries."

CEO Aaron Johnson will continue to lead Kinetrex under its new owners. The company's 25 employees will continue to operate the company. Four to six new employees are expected to be hired.

Kinetrex customers include United Parcel Service, which buys LNG to fuel its truck fleet, and engine manufacturer Cummins Inc.

Elsewhere in the LNG production sector, Dresser-Rand, a unit of Siemens Power and Gas, started the commissioning of its first micro-scale LNG production through the modular, portable "LNGo" unit, which is being operated by Frontier Natural Resources. It is operating at Tenaska Resources' Mainesburg field in the Marcellus Shale in Pennsylvania.

Dresser-Rand said a separate LNGo installation for New Jersey's Elizabethtown Gas is in the final phases of construction and will be commissioned soon. LNGo is deployed directly in the field, having a footprint of 508 square feet, or roughly the size of a basketball court.

The standardized LNGo installation consists of four different modules, each handling one step of the liquefaction process. The whole LNGo system can be transported on eight trucks.

Dresser-Rand promotes the LNGo technology as helping to monetize stranded gas deposits through its relatively low capital and operating costs. "The micro-scale LNGo solution can be deployed in rough terrain or remote regions, eliminating the need to establish an expensive gas pipeline infrastructure or arrange for long-distance trucking of LNG from centralized plants to point of use," the company said.

In Europe, some car/truck transportation ships are running on LNG/diesel, and Norway-based United European Car Carriers (UECC) has launched two Chinese-produced car/truck carriers for short-sea service in the Baltic Sea region. Separately, Volkswagen has ordered two slightly larger pure car/truck vessels to ship vehicles from Europe to North America.

LNG for the UECC's ships is stored in a single insulated Type C storage tank capable of holding approximately 800 cubic meters, or more than 210,000 gallons of LNG.

In New York City, a first-ever demonstration in a city sanitation truck has been launched involving liquids derived from natural gas to create dimethyl ether (DME) and compete in the alternative transportation fuels space. A Mack truck is being powered by DME produced by California-based Oberon Fuels. As stated by city sanitation officials, the goal of the demonstration is to gather data on the use of DME fuel and vehicles in urban, heavy-load fleets.

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