Inergy LP has agreed to purchase the membership interests of Arlington Storage Co. LLC (ASC), the majority owner and operator of Steuben Gas Storage Co., which owns a storage facility in Steuben County, NY.
The Steuben facility has approximately 6.2 Bcf of working gas capacity, maximum withdrawal capability of 60 MMcf/d and maximum injection capability of 30 MMcf/d. It was developed and placed in commercial service in 1991. The storage capacity is fully contracted under long-term agreements with investment-grade counterparties. This transaction is expected to be immediately accretive to Inergy unitholders on a distributable cash flow per unit basis.
The Steuben facility is currently connected to Dominion Gas Transmission’s Woodhull line (see Daily GPI, Dec. 20, 2006) and serves the Northeast gas market. The acquisition of ASC is subject to closing conditions and regulatory approvals; closing is expected in October.
In addition to Steuben, ASC owns the development rights to the Thomas Corners storage project, also in Steuben County. Upon its completion Thomas Corners will have a working gas capacity of approximately 5.7 Bcf and maximum withdrawal and injection capabilities of 100 MMcf/d and 50 MMcf/d, respectively. Inergy expects the Thomas Corners project to be commercially operational by the fall of 2009. Thomas Corners is expected to interconnect with Tennessee Gas Pipeline Co.’s Line 400 and Columbia Gas Transmission’s A-5 line. Connections to Empire Pipeline, Millennium Pipeline and Dominion’s Woodhull line are also under consideration.
Inergy also said it plans to expand its salt cavern storage facility near Bath, NY, for high-deliverability service. Inergy intends to develop additional caverns with natural gas storage capacity of approximately 4 Bcf of working capacity, maximum withdrawal capability of 150 MMcf/d and maximum injection capability of 75 MMcf/d.
With the acquisition of ASC and the further development of the Thomas Corners and Bath facilities, Inergy will add approximately 15.6 Bcf of working capacity within approximately 60 miles of its existing Stagecoach gas storage facility (see Daily GPI, Oct. 27, 2005; July 12, 2005). Inclusive of the Stagecoach operation, Inergy will control in excess of 40 Bcf of working storage capacity, making it one of the largest independent storage operators in the northeastern United States.
“We are pleased to announce this acquisition and the additional expansion plans for our Northeast natural gas storage platform as we continue to successfully execute the diversification of our operations,” said Inergy CEO John Sherman.
Inergy said it will announce an open season offering gas shippers storage services from both the Thomas Corners depleted gas field and Inergy’s salt cavern facility.
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