As part of a broader asset-shedding strategic plan, the Los Angeles Department of Water and Power’s (LADWP) interim general manager proposed selling the utility’s substantial natural gas reserves in Wyoming’s Pinedale Basin.
LADWP holds roughly 74% of a $300 million reserves purchase made five years ago by a coalition of Southern California public-sector power providers (see Daily GPI, June 24, 2005).
LADWP originally worked with its public-sector utility financing arm, the Southern California Public Power Authority (SCPPA), to line up the natural gas reserves, but SCPPA Executive Director Bill Carnahan told NGI he was not contacted by the utility regarding the proposal, but he offered the possibility that SCPPA might offer to buy back LADWP’s share.
SCPPA is somewhat on the outside looking in regarding the portion of the deal held by the nation’s largest municipal utility. SCPPA pulled the deal together and financed it for the other public-sector utilities participating, but LADWP paid cash for its portion, so it can sell it without SCPPA’s involvement.
While saying he was surprised that LADWP is thinking about selling extensive assets, Carnahan said he wasn’t concerned, but would like the opportunity to buy back the reserves because SCPPA’s other members “really like these reserves.”
At the time the SCPPA deal was completed buying all of Denver-based Anshutz Oil & Gas Co.’s natural gas reserves in southwestern Wyoming, LADWP said it planned to get about 12% of its average daily fuel requirements from the gas field. It holds about 150 MMcf/d of firm transportation capacity on Kern River Gas Transmission’s system. Details of the deal’s terms were not disclosed according to the confidentiality agreements that the muni utilities signed with Anshutz Pinedale Corp.
The other utilities with roughly 26% of the reserves are Turlock Irrigation District (10.6%) and the cities of Anaheim (5.3%), Glendale (4.3%), Burbank (2.1%), Pasadena (2.1%) and Colton (1.1%).
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