Dynegy Inc. has let go of another asset in its bid to ensure liquidity, selling Hornsea Ltd. natural gas storage facility in the United Kingdom to SSE Energy Supply Ltd. for about $200 million (130 million pounds). The Hornsea facility was one of several assets purchased last year from BG Storage Ltd. for a total of $600 million, and had been considered a key part of its European growth plan just before the energy marketplace fell apart (see Daily GPI, Nov. 29, 2001).

Dynegy Hornsea, a subsidiary of Dynegy Europe Ltd., is one of the key players in physical gas storage in the UK gas market, with a total storage capacity of 325 million cubic meters, and a deliverability of 18 million cubic meters/day. Hornsea also owns a neighboring development site at Aldbrough, and has planning permission for development as an additional salt cavity storage facility. SSE Energy is a subsidiary of Scottish and Southern Energy plc.

When Dynegy acquired BG Storage last year, the deal included 30 wells with five offshore platforms, nine salt caverns and about 18 miles of pipelines and an onshore gas processing terminal. Dynegy had used a combination of cash on hand and short-term debt to make the deal.

“This represents another step forward in restructuring our business and improving our financial profile,” said Dan Dienstbier, Dynegy CEO. “We identified Hornsea as a valuable, but non-core asset when we established our UK storage business last year.” ABN AMRO acted as the exclusive financial adviser to Dynegy in the transaction.

Hornsea and Rough, the other major facility included in the BG transaction, are used by approximately half of the UK’s natural gas shippers. Rough, which Dynegy is also interested in selling — completely or for a stake — is an offshore depleted natural gas field with a deliverability rate of 1.5 Bcf/d. The two facilities are capable of storing 111 Bcf of natural gas.

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