Kinder Morgan Energy Partners LP. (KMP) said it is buying the 4.2 Bcf Dayton salt dome gas storage facility in Liberty County, TX, from Texas Genco for $51 million in cash plus $49 million of debt. The field will continue to serve Texas Genco's power generation operations in East Texas.
The storage facility has 6.3 Bcf of total capacity, which includes the working gas and 2.1 Bcf of base gas. It began service in 1986 and currently has 750 MMcf/d of deliverability and an injection rate of 325 MMcf/d. CEO Richard D. Kinder said the purchase should be immediately accretive to earnings and cash flow at KMP.
"This is a strategic acquisition that complements our existing Texas Intrastate Pipeline Group assets and positions the company to pursue expansions at Dayton that will provide needed services to utilities, the growing liquefied natural gas (LNG) industry along the Texas Gulf Coast and other storage users," Kinder said. "As part of this transaction, we have entered into a long-term storage capacity and transportation agreement with Texas Genco."
The transaction is expected to close in the third quarter. The storage facility ties into KMP's 5,800-mile Texas Intrastate Pipeline system, which can transport up to 5 Bcf/d and currently has 120 Bcf of natural gas storage capacity.
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