Duke Energy Gas Transmission (DEGT) has agreed to buy the 50% of Saltville Gas Storage LLC that it did not already own, along with related pipeline assets and the Early Grove gas storage field in southwestern Virginia, from AGL Resources for $62 million. The deal is expected to close in the third quarter.

“The acquisition will allow us to grow our high-deliverability salt cavern storage position in one of our market areas as well as grow the customer base of our East Tennessee Natural Gas (ETNG) system,” said DEGT CEO Martha B. Wyrsch. “Also, as we work to add the infrastructure that attaches more regional natural gas supply to ETNG, the acquisition of these assets will enhance our value by providing shippers with more supply alternatives and greater transportation flexibility.”

Saltville Storage, which began commercial operation in summer 2003 and is expandable, currently has a working gas capacity of about 2 Bcf, but is expected to be expanded to 4.6 Bcf with 425 MMcf/d of deliverability. The local geologic formation provides for the only salt cavern storage in an area from the Gulf Coast to northern Pennsylvania.

In addition to Saltville Storage, the other hard assets involved in the transaction include the nearby previously developed Saltville salt cavern storage field and related facilities with a working gas capacity of about 1.1 Bcf, a 77-mile, 8-inch diameter natural gas pipeline known as the P-25 line and the Early Grove storage field, a 1.5 Bcf capacity depleted field storage facility in Washington and Scott counties, VA. The P-25 pipeline stretches from Saltville to Radford, VA, running parallel to ETNG. The Early Grove facility is site of the first natural gas discovery in Virginia.

“As natural gas supply remains tight and in anticipation of coming volumes of liquefied natural gas (LNG), high deliverability storage will play an increasingly important role in managing natural gas price volatility and meeting peak winter demand,” said Wyrsch.

DEGT plans to expand Saltville Storage as market demand dictates. The company already owns and operates more than 32 Bcf of high deliverability salt cavern working gas storage capacity in the Gulf Coast region at its Moss Bluff, TX, and Egan, LA, facilities and is working to develop other similar facilities.

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