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California Munis Secure Wyoming Gas Reserves; LADWP to Lead Project

A group of Southern California municipal utilities led by Los Angeles Department of Water and Power (LADWP) struck a $300 million deal to purchase all of Denver-based Anshutz Oil & Gas Co.'s natural gas reserves in southwestern Wyoming. The assets being purchased include an interconnection to Kern River Gas Transmission.

Finalizing the deal, which is effective July 1, depends on a decision by the Los Angeles City Council which is scheduled for June 28. LADWP's oversight board approved the contract on Tuesday. LADWP holds a 74% interest in the assets, and the six other city-run utilities or irrigation districts hold the remaining interest. LADWP's board last month approved the framework for the deal through the Southern California Public Power Authority (SCPPA).

In two previous false starts, the city council has taken up the issue but failed to have enough council members to pass the contract. The issue now goes back to the council for a second vote, at which time a simple majority (eight votes) can ratify the deal, according to an LADWP official.

LADWP plans to get about 12% of its average daily fuel requirements from the gas field. It holds about 150 MMcf/d of firm transportation capacity on Kern River. The LADWP official said the City of Los Angeles is expecting to begin receiving gas supplies under the contract on July 1.

"If the council does not approve it, there is no transaction, so we're not allowed to release details of the transaction according to the confidentiality agreements we signed with Anshutz Pinedale Corp., and that is why the issue has been handled in closed sessions," the LADWP official said.

The other utilities with roughly 26% of the reserves are Turlock Irrigation District (10.6%) and the cities of Anaheim (5.3%), Glendale (4.3%), Burbank (2.1%), Pasadena (2.1%), and Colton (1.1%).

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