In a deal that also includes the local gathering pipeline system, Sioux Falls, SD-based NorthWestern Energy Corp. earlier in September announced that it had bought a majority interest in the Battle Creek Natural Gas Field on Sweetgrass Arch in Blaine County, MT, from a private owner. It includes the seller's interest in the Battle Creek Gathering System Joint Venture.

Under its agreement, NorthWestern paid the private seller $11.4 million in cash for the majority interest in the field assets and the gathering system, funding the transaction through its existing revolving credit facility, which is about $160 million after the most recent deal. NorthWestern CEO Bob Rowe said the gas field is "well defined and established," which he called "consistent with our low-risk profile" that intends to stay away from the exploration side of the business.

NorthWestern is seeking approval from the Montana Public Service Commission (PSC) to bring the field and gathering system into its combination utility rate base in the state. "It is both in our service territory, near Havre, MT, and connected to our existing natural gas pipeline system," said Rowe, a former member of the PSC.

Last year the Montana legislature changed state law to allow a utility holding company to acquire natural gas production and gathering resources and include them in the utility rate base, subject to PSC approval.

"Owning natural gas reserves is intended to provide customers with a source of rate-based energy that helps hedge against price volatility," Rowe said. The relatively small Battle Creek field already serves the NorthWestern utility customers in Montana through a soon-to-expire purchase agreement, he said. "We will continue to dedicate this resource to our natural gas customers, and will not use it as a source of supply for our soon-to-be-completed Mill Creek generation station."

©Copyright 2010 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.