Inergy, L.P.on Wednesday announced that its regulated subsidiary, Central New York Oil and Gas Company, LLC (CNYOG), inked a deal to purchase from Tennessee Gas Pipeline a 24-mile lateral pipeline connecting Inergy’s Stagecoach natural gas storage facility to Tennessee’s Line 300.
Kansas City, MO-based Inergy said it also negotiated an agreement to buy a liquefied petroleum gas (LPG) storage facility from Bath Petroleum Storage Inc. It estimated the combined purchase price of the midstream assets at approximately $66 million.
The so-called Stagecoach Lateral extends from CNYOG’s Stagecoach storage facility in Tioga County, NY, to Tennessee’s Station 319 in Bradford County, PA. The line, which was placed in service in January 2002, has a certificated capacity of 500 MMcf/d and is currently 80% contracted, according to Inergy. The purchase price of the Stagecoach Lateral was pegged at $35 million. The transaction is subject to approval by the Federal Energy Regulatory Commission and is expected to close in January 2007, Inergy said.
“The combination of recent contracting success, our Phase II expansion, planned connectivity to the Millennium Pipeline project, and potential hub services make this [Stagecoach Lateral] a compelling addition to our natural gas storage and transportation platform,” said Inergy CEO John Sherman.
Bath Storage is a 1.2 million-barrel salt cavern storage facility located near Bath, NY, about 210 miles northwest of New York City and 60 miles from Inergy’s Stagecoach facility. Bath Storage is supported by both rail and truck terminal facilities capable of loading/unloading 15-17 rail cars per day and 15 truck transports per day. The purchase price of Bath Storage was estimated at $31 million, plus customary working capital adjustments. The transaction is expected to close at the end of September.
The Bath Storage facility has term contracts for both propane and butane with primarily investment grade-rated customers. In addition, expansion of the facility into high-deliverability natural gas storage service as well as incremental LPG storage caverns will be pursued, Inergy said. With regard to natural gas storage, Inergy estimated the facility’s characteristics will support a storage capacity of up to 4 Bcf.
“This transaction provides a unique opportunity to merge the strengths of our propane business with our growing midstream business. Bath Storage will provide continued LPG storage services for existing customers as well as provide attractive expansion potential to our natural gas storage and transportation operations,” Sherman said.
Inergy is considered one of the fastest growing master limited partnerships in the country. Its operations include the retail marketing, sale and distribution of propane to residential, commercial, industrial and agricultural customers. Inergy serves approximately 700,000 retail customers from over 300 customer service centers throughout the eastern half of the United States. The company also operates a natural gas storage business and a supply logistics, transportation and wholesale marketing business that serves independent dealers and multi-state marketers in the U.S. and Canada.
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