Houston-based El Paso Energy Corp. plans to acquire Crystal GasStorage Inc. of Shreveport, LA, for $57 cash per Crystal share in adeal worth $224.6 million.

Crystal owns and operates, through wholly owned subsidiaries,two salt dome storage facilities near Hattiesburg, MS, and holdsvarious interests in gas properties, primarily in Arkansas andLouisiana. Combined, the caverns have 6.7 Bcf of working gascapacity. A seven Bcf expansion is awaiting FERC certification andis fully subscribed by Southern Co. Services, which operateselectric utilities in Mississippi, Alabama and Georgia.

“Strategically, there’s a lot of value for us, particularlyfollowing our merger with Sonat Inc. This is probably the highestquality salt dome storage field in this region in the country,”said El Paso spokeswoman Paula Delaney. “They have premium accessto northeastern markets.” With additional storage caverns, thefacility could be expanded to hold up to 60 Bcf of working gas,Delaney said. Fast injection and withdrawal rates make the storageideal to meet peaking needs, she said.

The storage facility straddles both El Paso’s Tennessee NaturalGas and Southern Natural Gas, which El Paso is in the process ofacquiring. The facility also straddles Koch Gateway and Transco.

Crystal also holds gas properties with proven reserves of morethan 30 Bcfe. Delaney said Sonat had considered acquiring thesereserves the last time they were for sale, but Crystal got theminstead. “The idea with us for having these reserves is to use themto fuel long-term power generation deals.”

Crystal’s outstanding preferred stock will be redeemed at$1.00/share. Quantum Fund N.V. and its affiliates, which ownapproximately 64% of Crystal’s outstanding common stock, havecommitted to support the transaction and have entered into a votingagreement in this regard.

Crystal’s Board of Directors will recommend stockholderapproval. In June, Crystal Oil changed its name to Crystal Gas tobetter reflect its core business of gas storage. In August, Crystalsaid it was reviewing its options, including the possible sale ofthe company. Crystal shares closed up $1 to finish at $46 Friday.

©Copyright 1999 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.