Kansas City, MO-based Inergy LP announced Tuesday that subsidiary Inergy Midstream has agreed to buy Tres Palacios Gas Storage LLC, owner of the Tres Palacios natural gas storage facility in Matagorda County, TX, from NGS Energy LP for $725 million plus reimbursement of certain capital expenditures and subject to customary net working capital adjustments.
Tres Palacios Gas Storage is a high-deliverability salt dome facility with approximately 38.4 Bcf of working capacity, including 27.1 Bcf of working capacity in caverns one and two, and 11.4 of incremental working capacity (third cavern) awaiting the approval of the Federal Energy Regulatory Commission. Tres Palacios received approval from the agency last Wednesday to place the third cavern in service (see Daily GPI, Aug. 31).
The facility is expandable by an additional 9.5 Bcf of working capacity, which Inergy said it expects to place in service by 2014 (cavern four).
Located approximately 100 miles southwest of Houston, Tres Palacios is interconnected with 10 interstate and intrastate pipelines: Florida Gas Transmission, Transcontinental Gas Pipe Line, Tennessee Gas Pipeline, Natural Gas Pipeline Company of America, Central Texas Gathering System, Houston Pipe Line, Texas Eastern Transmission, Enterprise Texas, Enterprise Texas Intrastate and Kinder Morgan Tejas.
The acquisition enlarges Inergy's existing gas storage platform and creates the largest independent gas storage provider in the United States, the company said. The facility on the Markham salt dome could support more than 150 Bcf of capacity.
"The Tres Palacios facility is well positioned to supply the large daily needs of the Texas natural gas-fired power generation market as well as leverage Inergy's existing customer relationships in the natural gas storage industry," said Bill Moler, senior vice president of Inergy Midstream.
To fund the acquisition, Inergy has secured a commitment letter for an underwritten $700 million bridge financing from Wells Fargo, Barclays Capital and J.P. Morgan. The transaction is expected to be completed within 60 days, and is subject to approval under the Hart-Scott-Rodino Antitrust Act and other customary closing conditions.
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