FERC on Tuesday approved El Paso Natural Gas Co.’s bid to sell more than 200 miles of lateral pipelines in West Texas to a Midland, TX-based natural gas provider for an estimated $300,000. At the same time, it approved the request of the buyer, West Texas Gas Inc., to exempt the facilities from FERC jurisdiction under the Natural Gas Act.

The order gave a green light to the acquisition by West Texas Gas Inc. of El Paso’s 132-mile Snyder Pipeline system and 84.4 miles (as well as related supply feeder laterals) of the 152-mile, 20-inch diameter Sonora Pipeline system, which are located in the Permian Basin area in West Texas. El Paso will retain 68 miles of the largest segment (Line 3137) of the Sonora line [CP06-373].

West Texas Gas plans to operate the Snyder Pipeline as an intrastate line subject to the jurisdiction of Texas regulators, and the Sonora Pipeline as a nonjurisdictional gathering facility.

The company said the Sonora Pipeline would be transferred to its affiliate, NuStar Joint Venture, which owns and operates the Benedum Gas Processing Plant in Upton County, TX, to which the Sonora system is currently connected. NuStar will cut and cap the Sonora system at the interconnect with El Paso, physically isolating the facilities from the rest of El Paso’s interstate system, West Texas Gas noted.

It will then operate the pipeline as a gathering line, receiving high-Btu natural gas for downstream processing at the Benedum plant. After processing, NuStar will deliver the gas to El Paso, Northern Natural Gas and Kinder Morgan Texas Pipeline LP at interconnections located downstream of the Benedum processing facility.

Snyder Pipeline will be operated as part of West Texas Gas’s existing intrastate pipeline system, delivering gas to two municipal gas distribution customers (the cities of Goldsmith and Spur, TX) and to certain industrial end users in Texas, including Alon USA LP and Sid Richardson Carbon Co. The company said it also will deliver gas to numerous low-volume taps owned and operated by Atmos Energy, an unaffiliated Texas local distribution company.

El Paso and West Texas Gas said they have received the consent of all 15 firm transportation customers that would be affected by the sale of the Snyder and Sonora Pipeline systems, and have notified interruptible transportation customers that could be impacted as well.

“Since [El Paso’s] proposed abandonment of the Snyder and Sonora Pipelines will permit [it] to divest itself of two pipeline systems which were originally constructed to support its former merchant functions and no longer serve that function, the abandonment proposal is required by the public convenience and necessity,” the FERC order said.

It further noted that the sale would enable El Paso to further streamline its interstate pipeline operations by eliminating approximately $1 million in operational and maintenance costs.

West Texas Gas, the fourth largest investor-owned utility in Texas, is involved in the distribution, marketing, transportation and production of natural gas, as well as gathering and processing.

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