Ever-expanding San Jose, CA-based Calpine Corp., one of the nation’s fastest growing merchant power plant developers, Tuesday bought another 236 Bcf of natural gas reserves through two purchases–one in the San Juan Basin in New Mexico and the other in South Texas. This brings Calpine’s gas reserves to about 1.5 Tcf, with a goal of having 6.7 Tcf in the company’s portfolio by the end of 2005 to support an almost exclusively gas-fired fleet of plants totaling 70,000 MW of output.

The cost of the latest gas reserve purchases is $355 million, plus assumption of $49.5 million in debt.

Fulfilling a company goal of owning and operating production in a strategic basin, Calpine acquired what it calls “significant assets” from The Bayless Companies and their partners with reserves located in the western portion of the San Juan Basin. Currently, the 35 wells produce approximately 6 MMcf/d (equivalent), 96% of which is natural gas, according to Calpine. This deal closed at the end of the second quarter.

The other purchase, expected to close Aug. 15, involves the acquisition of a majority interest in Michael Petroleum of Houston, including total proved reserves in South Texas of 204 Bcf (equivalent), and current production of 43 MMcf/d (equivalent).

In addition, this second purchase provides “an inventory of high quality, low-risk drilling locations within a 94,000-acre position in close proximity to Calpine’s South Texas Magic Valley and Hidalgo Energy Centers,” said Calpine officials, noting three rigs are currently operating on the acreage and a fourth will be added by the end of the year. The nearby generation plants have total capacity of 1,190 MW.

Calpine maintains its long-standing goal of having 25% of its natural gas requirements provided from the company’s own sources, said Charles Chambers, business development vice president. “Calpine will continue to acquire and develop reserves in strategic natural gas basins in North America,” he said.

Current gas reserves held by Calpine are located in Western Canada, Northern California, the Gulf of Mexico, Texas Gulf Coast, Colorado and Louisiana.

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