A New Mexico official said Thursday that the state does not intend to make a direct bid for Enron’s Transwestern Pipeline. The state, which told the court in June that it would be participating, indicated that the bulk bidding procedure, which requires bids on the entire collection of Enron’s domestic pipeline assets rather than on the five individual companies that make up Enron’s CrossCountry Energy LLC, was the major sticking point.
In June, Judge Arthur Gonzalez of the bankruptcy court approved a $2.35 billion sale of CrossCountry to Southern Union and General Electric’s commercial finance energy unit. Southern Union’s bid surpassed a prior $2.2 billion bid by NuCoastal LLC. The deadline for any additional bids from other suitors is Aug. 23. Bids approved by the bankruptcy court will go through an auction on Sept. 1.
“We were weighing some options. We won’t be making a direct bid on the pipeline, however,” said Charles Wollman, a spokesman for the New Mexico State Investment Council. He had no comment on whether the state might consider joining with another company in making a bid for the Enron asset. The state already is partnering with a private company on the expansion of natural gas projects in the San Juan Basin.
“We wanted to make sure that we were doing as much as we could to ensure that we were protecting our own interests here in the state,” Wollman said regarding Transwestern. “Our job at the Investment Council is to protect and grow the state’s permanent funds, which are about $11.5 billion, and a good portion of those funds were built through the taxing of oil and gas revenues. Whether oil and gas revenues go higher or lower is very important to New Mexico. Anything that would increase the gas coming out of the San Juan Basin would be beneficial to the state.”
Wollman said the state will be closely watching the bidding process. In June, New Mexico told the court that Enron creditors, including the state, were being cheated out of higher profits from the asset sale because Enron’s “skewed” bidding process disallowed bids on individual assets, which if sold separately would bring in more than the $2.35 billion being offered by Southern Union. New Mexico is one of Enron’s creditors and has filed claims totaling $67.8 million. The Investment Council claims the bankrupt company owes it about $45.3 million.
The state has no interest in bidding on any of Enron’s other assets. CrossCountry Energy owns a 50% stake in Citrus Corp., owner of Florida Gas Transmission; owns Northern Plains Natural Gas, which has a stake in Northern Border Pipeline Partners; and owns Transwestern, a 2,400 mile pipe that transports gas from the San Juan, Anadarko, and Permian Basins to markets in Texas, Arizona, New Mexico and California.
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