Dynegy Inc. has completed its acquisition of BG Storage Ltd. and its natural gas storage facilities and related assets in the United Kingdom, establishing the cornerstone of the Houston-based company’s European physical energy convergence presence. The deal includes 30 wells with five offshore platforms, nine salt caverns, about 19 miles of pipelines and an onshore natural gas processing terminal.

The transaction has been approved by the UK’s Gas and Electricity Markets Authority and Department of Trade and Industry and has been cleared by the competition minister following advice from the director general of fair trading in the UK. Dynegy Europe Ltd. and BG Group plc announced the acquisition last July (see NGI, July 23). BGSL’s 260 employees will remain employed under its new name of Dynegy Storage Ltd.

Under the terms of the purchase agreement, Dynegy paid approximately $600 million (421 million pounds) for BGSL and its assets. Dynegy used a combination of cash on hand and short-term borrowings to complete the purchase. The ownership of BGSL is expected to be accretive to earnings in 2002 and beyond.

Rough and Hornsea, two of the facilities included in the transaction, are key providers of physical storage space in the UK natural gas market and are used by approximately half of the UK’s natural gas shippers. The deliverability rate of Rough, an offshore depleted natural gas field, is 1.5 Bcf/d (455 GWh/d). The deliverability rate of Hornsea, an onshore salt cavity installation, is 620 MMcf/d (195 GWh/d). The two facilities are capable of storing 111 Bcf of natural gas.

As part of this transaction, Dynegy also acquired the Easington natural gas processing terminal. The facility processes Rough and third-party natural gas streams and delivers into the UK natural gas transportation network. BGSL previously announced plans to develop the Aldbrough storage facility, a salt cavern with an expected storage capability of 6 Bcf and deliverability rate of 600 MMcf/day (185 GWh/d). Dynegy Europe will examine the feasibility of Aldbrough’s development plans in the future.

Dynegy Europe has already consulted with existing and potential customers on enhancements and additions to the storage services and has established an e-mail address (storage.consultation@dynegystorage.co.uk) to allow customers to provide further views. To request information about storage services, customers can also contact Dynegy at inquiry@dynegystorage.co.uk.

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