San Diego-based Sempra Energy closed its purchase of Mobile, AL-based EnergySouth Inc. for $510 million in cash. EnergySouth is absorbed into Sempra Pipelines & Storage, greatly increasing the company's profile in the Gulf of Mexico region. A "substantial majority" of EnergySouth shareholders approved the sale Sept. 30; they will receive $61.50/share. The transaction has received all necessary regulatory approvals, including the federal antitrust clearance under the Hart-Scott-Rodino Act. Announced in late July, Sempra's acquisition gives it a majority ownership in two large, high-cycle underground gas storage facilities that when fully developed will have a combined capacity of 57 Bcf. When the deal was announced Standard & Poor's Ratings Services (S&P) revised to "negative" the ratings outlook on Sempra Energy, citing the deal's provision that Sempra assume $283 million of EnergySouth debt. S&P affirmed the company's "BBB+" corporate credit rating and its "A" rating on Sempra's California utility subsidiaries. Included in the purchase is Mobile Gas Service Corp., an Alabama gas distribution utility owned by EnergySouth. Mobile Gas serves about 93,000 retail customers in southwest Alabama. Sempra said than James Fine has been named president of Mobile Gas after previously serving as the company's vice president for operations.
Houston-based Copano Energy LLC agreed to acquire the McMullen Lateral pipeline, a 151-mile, 24-inch diameter line extending from McMullen County, TX, to Wharton County, TX, from Williams' Transco subsidiary. Copano's board also approved construction projects to integrate the McMullen Lateral with Copano's Houston Central gas processing and treating facilities, including construction of approximately 25 miles of 24-inch pipeline diameter to deliver gas from the McMullen Lateral to Copano's Houston Central plant for processing, and approximately 25 miles of 16-inch diameter pipeline to gather gas and to deliver residue gas to Transco's Zone 1 pool at Compressor Station 30 in Wharton County. The projects will provide McMullen Lateral shippers with access to numerous pipelines, including Transco, and will also provide an additional residue gas outlet for Copano's Houston Central processing plant. Copano anticipates that the combined acquisition and integration costs will be about $110 million. Copano expects to make a filing with the Federal Energy Regulatory Commission for the deal within 60 days. The company plans to finance the transaction and related projects with existing liquidity sources and anticipates making these expenditures primarily in 2009 and 2010. Copano is a midstream gas company with operations in Oklahoma, Texas, Wyoming and Louisiana.
Westport, CT-based NGS Energy LP subsidiary Tres Palacios Gas Storage LLC began commercial operation at its Matagorda County, TX, gas storage project. The facility last week started allowing anchor shippers to inject gas into its first cavern, which has approximately 12 Bcf of working capacity. Two additional caverns are due to come on line in 2009 and 2010, bringing total capacity at the facility to 36 Bcf, with the capability to inject up to 1 Bcf/d and withdraw up to 2.5 Bcf/d. Other services, including firm and interruptible park and loans, no notice, balancing and wheeling, are also available to customers at the facility. The Tres Palacios facility is interconnected with 10 interstate and intrastate pipelines, including: Florida Gas, Transco (near Station 30), Tennessee, NGPL, CTGS (Transco/Tennessee), HPL, Texas Eastern, Enterprise Texas, Enterprise Texas Intrastate and Kinder Morgan Tejas. Tres Palacios announced in July that it had completed mechanical integrity testing on one of the caverns at the southeast Texas site (see NGI, July 21). Construction had been under way since the project received approvals from the Federal Energy Regulatory Commission last year (see NGI, Sept. 24, 2007).
Calgary-based EnCana Corp. said the integrated oil company that it will create as part of its split into two independent energy companies will be called Cenovus Energy Inc., while the natural gas company will continue as EnCana Corp. EnCana announced in May that it would split into two separate companies -- one a pure play in unconventional natural gas and the other an integrated oil company with some existing southern Alberta shallow gas (see NGI, May 19). The corporate reorganization, subject to shareholder and court approval, is expected to be completed early in 2009. Under Canada's Business Corporations Act, the proposed reorganization will be pursued with a court-approved Plan of Arrangement, and it is subject to approvals from both Canadian and U.S. tax authorities. EnCana shareholders will be given one share in each new company for each of their existing shares. The change was characterized by EnCana as having "minimal impact" on its employees, operations, suppliers, business partners and stakeholders. In total, there will be added workforce because separate administrative structures, with separate boards, will be created for each new company. Currently EnCana has 6,500 employees, 500 of which are at its Calgary headquarters, and it is estimated that an additional 500 jobs will be created collectively for the two new companies' head offices, both of which will remain in EnCana's current headquarters building.
Georgia natural gas marketer Catalyst Energy Group and two affiliates filed for Chapter 11 bankruptcy protection last week after losing a required credit line and contracted fuel supply. Privately owned Catalyst and affiliates Catalyst Natural Gas LLC and Catalyst Supply Services Inc. estimated assets of less than $50,000 and liabilities of between $1 million and $10 million owed to 49 or fewer creditors, according to court documents. The companies serve about 34,000 residential and commercial gas customers throughout Georgia, including the Atlanta metropolitan area. Filings indicate that Catalyst intends to operate its business as a debtor in possession. If Catalyst loses the right to sell gas, customers could be randomly assigned to other marketers. "Under no circumstance will Catalyst's customers' natural gas service be disrupted, nor will they lose their right to select a marketer of their choice," the Georgia Public Service Commission said. Catalyst was certified to do business in Georgia on Feb. 7, 2006. Catalyst CEO Fernando de Aguero blamed the bankruptcy on the financial meltdown on Wall Street, according to an Associated Press report.
Avista Utilities increased rates for its gas and electricity customers in Idaho, reflecting earlier decisions by the Idaho Public Utilities Commission (PUC). Retail gas utility rates increased by $3.9 million, and electric retail services were boosted $23.2 million. The PUC approved a settlement among the utility, PUC staff and others that increases electric and gas rates an average of 11.98% and 4.7%, respectively. This compares to Avista's original filing seeking increases of 16.7% and 5.8% for electric and gas retail customers, respectively. Avista serves 72,000 gas and 120,000 electric customers in northern Idaho. "This is the first Avista general rate case since 2004; however, it comes on top of [the utility's] annual power cost adjustment (PCA) and purchased gas cost adjustment (PGA) rate changes, both of which are adjusted annually Oct. 1," said the PUC, which noted the PCA and PGA hikes amount to increases of $3.43 and $2.96/month, respectively. "When Avista originally filed its gas cost surcharge last Aug. 18 it requested a 14.2% increase, but declining wholesale gas prices since then and the company's ability to purchase additional gas for the coming year resulted in the company adjusting its filing on Sept. 15 down to 4%." The PUC approved new authorized profit levels for the utility -- an 8.45% rate of return and a 10.2% return on equity.
El Paso Pipeline Partners LP completed its purchase of an additional 30% interest in Colorado Interstate Gas Co. (CIG) and an additional 15% stake in Southern Natural Gas Co. from El Paso Corp. The partnership now owns a 40% interest in CIG and a 25% share of Southern Natural. The transaction was financed with $250 million of debt and the issuance of approximately 27.8 million common units. El Paso Pipeline Partners also owns Wyoming Interstate Co., an interstate pipeline that serves the Rocky Mountain region.
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