AEC Expands Storage Holdings, Buys OK Facility

Alberta Energy Company (AEC) has pulled the Manchester Gas Storage Facility in Oklahoma out of the legal quagmire surrounding the Mountain Energy bankruptcy. AEC subsidiary Salt Plains Storage Inc. purchased Manchester, which is located in Grant County, OK, for $42 million last month.

The Manchester plant, which is similar in size to AEC's other U.S. storage facility --- Wild Goose Storage in California --- has 15 Bcf of working capacity in a depleted gas field. AEC will rename it Salt Plains Gas Storage Facility.

Salt Plains Storage President Rick Daniel said all claims against the facility have been shifted to the proceeds from the sale. "The various claimants now will try to have their claims resolved out of the proceeds of the sale of the storage assets," he said. "It allows us to go ahead and operate the facility free of all these claims."

The purchase was approved earlier this month by the Federal Bankruptcy Court for Northern Oklahoma. The assets of the storage facility were owned by two companies that filed for voluntary bankruptcy in mid December because of ties to Mountain Energy, which had come under a barrage of complaints for, among other things, allegedly converting for its own use gas that it was storing on behalf of other companies.

The storage facility was under a temporary restraining order after TransCanada Energy Marketing USA Inc., Tenaska Marketing Ventures, Farmland Industries and DuCoa LP all petitioned the U.S. Bankruptcy Court for the Western District of Missouri to force Mountain Energy into bankruptcy. They claimed they were out $24.6 million because of their business dealings with Mountain Energy.

Some of those claims alleged that the storage business at Manchester had some liability, which is what prompted the previous owner to file for voluntary bankruptcy.

"The bankruptcy really had more to do with claims arising from some of the commercial side of the business as it was previously being operated," said Daniel.

AEC's purchase had been on the table long before the Mountain Energy problems, he said. "The storage facility itself we view as a very good, sound storage facility.

"Salt Plains is ideally located in a region where demand for natural gas as a primary fuel for heating and power generation is growing," said Daniel. "Salt Plains is ready to contract storage capacity starting April 1."

Located about 110 miles north of Oklahoma City, Salt Plains is tied to the Williams Central and Oneok Gas Transportation pipelines, which serve both regional and continental gas markets. Salt Plains can inject 100 MMcf/d and withdraw and 200 MMcf/d of gas, giving it relatively high deliverability for a depleted field operation. It will be offering both long- and short-term firm storage services effective April 1.

Daniel said there are a couple of existing contracts but a "fair amount" of space is available. He said the facility historically served a wide variety of customers, including producers, marketers and end-use industrial customers in the Midcontinent region.

AEC is Canada's largest gas producer and North America's largest independent gas storage operator. Its main facility is the AECO C Hub in southeastern Alberta. Its other facilities include storage at Hythe, AB, Wild Goose Storage near Gridley, CA, plus leased storage capacity in the Gulf Coast and Midwest regions. AEC's North American gas storage network has a total capacity of 133 Bcf. Withdrawal capability is more than 2.5 Bcf/d.

For information about leasing opportunities at Salt Plains, contact Ben Ledene, vice president of market development at (403) 266-8192 or by e-mail at

Rocco Canonica

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