AEP Completes Houston Pipeline Purchase
American Electric Power completed its purchase Friday of Enron Corp.'s intrastate natural gas pipeline subsidiary, Houston Pipe Line Co. The $726.6 million transaction gives AEP, headquartered in Columbus, OH, a 30-year pre-paid lease related to the operation of one of North America's largest storage facilities, the Bammel Storage Facility and HPL's inventory.
AEP said the purchase price will be raised by issuing non-controlling, preferred equity interest to private investors. The purchase, first announced in January (see Daily GPI, Jan 15), was completed after regulatory approval was received from the U.S. Department of Justice under the antitrust Hart-Scott-Rodino Act.
HPL owns or leases and also operates one of the most extensive and flexible natural gas gathering, transportation and storage operations in Texas. Its intrastate system includes more than 4,400 miles of pipe with a 2.4 Bcf/d storage capacity, along with the Bammel Storage Facility. The facility has a capacity of nearly 118 Bcf and significant injection and withdrawal capacity.
"The acquisition of HPL complements our existing Louisiana natural gas assets and will contribute to our continued growth in natural gas marketing and trading," said Paul D. Addis, AEP vice president-wholesale.
With its Louisiana Intrastate Gas (LIG) assets, AEP will have a daily gas capacity of nearly 3.2 Bcf and more than 6,400 miles of pipe covering Louisiana and Texas. The HPL and LIG pipelines will remain physically separated. However, the two units will be linked through a central control system and combined approach to commercial decision-making.
"Having a physical presence in the Texas marketplace will enhance our marketing capabilities," said Addis. "We intend to utilize the natural gas pipelines as a foundation to expand our highly successful gas trading group."
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