NGI The Weekly Gas Market Report
FERC last Tuesday reversed its earlier position and approved Northern Natural Gas pipeline’s request to sell its extensive West Hugoton gas pipeline facilities in Kansas and Oklahoma to a Midland, TX-based energy company.
The MidAmerican Energy pipeline subsidiary proposed the sale of approximately 264 miles of pipeline, ranging in diameter from three to 26 inches, and associated facilities to WTG Hugoton LP, an affiliate of West Texas Gas Inc., the fourth largest investor-owned public utility company in Texas [CP06-89, CP06-90]. The agreed-upon price was approximately $24 million for the pipe assets located in seven counties in southwestern Kansas and in Texas County, OK, according to the two companies.
In late October, the Federal Energy Regulatory Commission blocked the proposed transaction due to widespread shipper protests and the failure of Northern Natural and WTG Hugoton to reach an agreement for continued service with the shippers who hold the vast majority of firm capacity rights on the West Hugoton facilities.
Since then, however, “Northern and WTG have filed revised tariff sheets and contracts for the majority of the firm capacity on the system and all of the protests to the [deal] have been withdrawn. Based on this new evidence, and as conditioned herein, we will approve Northern’s abandonment of the facilities by sale to WTG and grant WTG’s associated requests for certificate authority” to own and operate the West Hugoton pipeline facilities, the FERC order said.
The order stipulates that WTG Hugoton’s acquisition of the facilities is to be completed and made available for service within 12 months from the date of the April 10 order.
Natural gas producers, marketers, municipal utilities and Kansas regulators initially attacked Northern Natural’s proposal to sell its West Hugoton gas pipeline facilities in Kansas and Oklahoma to WTG Hugoton (see NGI, April 17, 2006).
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