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El Paso Pays $188M for PPM to Assume Alliance Pipeline Contract

El Paso Corp. said it has paid PPM Energy and PPM Energy Canada Ltd $188 million to assume a 145,750 MMcf/d firm capacity obligation on Alliance Pipeline. El Paso said it will take a one-time charge in that amount in the fourth quarter.

The capacity obligation represented largest remaining legacy pipeline capacity obligation of its dismantled energy marketing operation, El Paso Marketing LP. The capacity assignment and assumption of demand charges begins on Nov. 1, 2007, and extends until Nov. 30, 2015. The capacity runs from Western Canadian supply basins in British Columbia and Alberta to the Chicago market area.

The transaction eliminates $65 million of annual demand charges. The company continues to make progress on divesting legacy assets. The marketing and trading division reported a third quarter loss of $108 million but that compared to a $398 million loss for the same period in 2005. In the first and second quarters of the year, the segment was in the black and its third quarter loss was mainly a result of the sale of Midland Cogeneration Venture.

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