El Paso Corp.’s exploration and production subsidiary agreed to sell some noncore properties in its onshore and Texas Gulf Coast regions in three agreements worth an estimated $517 million. El Paso did not disclose the buyers. At the end of 2007 the company had an estimated 191 Bcfe of proved reserves associated with the properties to be sold, with roughly half coming from each region. In December the average output for the Texas Gulf Coast properties was 39 MMcfe/d; the onshore properties produced 17 MMcfe/d. The transactions are expected to close by the end of March. Proceeds would be used to repay debt incurred with the $879.1 million acquisition of Peoples Energy Production Co. in September (see NGI, Oct. 1, 2007). El Paso also said it is negotiating with prospective bidders to sell some other noncore Gulf of Mexico properties. El Paso did not disclose which onshore properties were to be sold. Its onshore division focuses on exploring for unconventional natural gas in the Rocky Mountains, New Albany Shale, Arkoma/Midcontinent, Ark-La-Tex and the Raton and Black Warrior basins. The Peoples acquisition built El Paso’s reserves in the Ark-La-Tex region and along the Texas Gulf Coast. Jefferies Randall & Dewey acted as financial adviser.
Excelerate Energy has entered into a revaporized liquefied natural gas (LNG) off-take purchase arrangement with DB Energy Trading LLC, a subsidiary of Deutsche Bank AG. The agreement entitles DB Energy Trading to sell Excelerate Energy’s revaporized LNG delivered via Excelerate’s Energy Bridge at the Gulf Gateway and the Northeast Gateway deepwater ports for an undisclosed tenor. Energy Bridge vessels vaporize LNG on board and deliver natural gas through subsea buoys to seabed pipelines and into the gas pipeline grid. Gulf Gateway is located off the coast of Louisiana and is capable of delivering natural gas at a baseload rate of 500 MMcf/d, with peak rates up to 690 MMcf/d. Northeast Gateway, located off the coast of Massachusetts, recently completed construction and will take its first cargo deliveries in early 2008, the company said (see NGI, Jan. 14). It will accommodate peak sendout of up to 800 MMcf/d and a baseload rate more than 400 MMcf/d. Both terminals will have the ability to increase throughput as future generations of Energy Bridge vessels with increased regasification capacity are delivered. Nicole Jasper, Americas head of commodity sales at Deutsche Bank in Houston, said this is the bank’s first LNG off-take management agreement in the United States.
Pennsylvania-based Buckeye Partners LP has closed it purchase of the Lodi Gas Storage LLC facility in Northern California. The purchase was from ArcLight Capital Partners LLC for total cash consideration of approximately $432 million, Buckeye said. Buckeye said an additional $12 million will be due ArcLight when approval for expansion of Lodi is obtained from the California Public Utilities Commission (CPUC), which earlier in the month (Jan. 10) conditionally approved Lodi’s sale. The partnership said it financed the Lodi purchase with two equity offerings last year and a recently completed debt offering earlier in January. Along with a second underground storage operation, Kirby Hills, about 45 miles west of the Lodi facility, Lodi Gas Storage now has about 22 Bcf of working gas capacity, and the facilities are interconnected to the Pacific Gas and Electric Co. utility backbone transmission pipeline system in northern California. The Kirby Hills Phase II expansion project is expected to provide an approximate incremental 12 Bcf of working gas capacity, Buckeye said. The company hopes to have the expansion completed by the end of this year. CPUC conditions on the sale mostly guard against any sharing of information between Lodi and another merchant storage operation that previously had ties to Buckeye — Wild Goose Storage LLC, the state’s first independent underground natural gas storage facility developed a decade ago. CPUC’s Division of Ratepayer Advocates (DRA), originally opposed the sale until a settlement with five conditions was reached in November and filed with the CPUC. In addition, the CPUC required Buckeye and its affiliates to “give first priority” to Lodi’s capital needs. Buckeye Partners formed subsidiary Buckeye Gas Storage LLC to acquire membership interests in the Lodi operations.
Pacific Gas and Electric Co. (PG&E) will use liquefied natural gas (LNG) to power five of its Class 8 heavy-duty trucks as part of its efforts to run most of its fleet vehicles on alternative fuels. PG&E said it was the first utility in the nation to put Kenworth T800 LNG-powered trucks in service. The utility said it originally bought the large trucks as diesel units and collaborated on the conversion to LNG with Kenworth and Westport Innovations Inc., a leading developer of natural gas engines and fuel systems. Each of PG&E’s LNG trucks, based at one of its the utility’s Bay Area warehouses, can rack up 800 miles/day. Use of LNG will cut the fuel costs by 50%, PG&E said. PG&E operates 36 natural gas fueling stations throughout its Northern and central California service territory; 27 of the sites are open to the public. The LNG trucks fuel at the utility’s service center in Fremont, CA, in the East Bay.
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