TPC Corp. is changing hands yet again. This time NIPSCOIndustries subsidiary NI Energy Services is buying Houston-basedTPC for $132.5 million from PacifiCorp. The deal also involves apayment for working capital to be determined at closing. NI EnergyServices also gets PacifiCorp’s 66% interest in Market Hub PartnersLP (MHP)

The sale of TPC follows PacifiCorp’s October announcement thatit would refocus on its core electricity business in the westernUnited States and sell its other U.S. businesses. In DecemberPacifiCorp said it agreed to a friendly takeover by ScottishPower(see Daily GPI Dec. 8, 1998). PacifiCorp acquired TPC (formerlyTejas Power) in April 1997 for $265 million cash and assumed debtof $140 million. In December 1997, PacifiCorp sold the gasgathering and processing assets of TPC for $196.5 million.

TPC is a gas marketer, gas asset portfolio manager and adeveloper of salt cavern storage. MHP is the largest independentowner and operator of salt cavern gas storage in North America.MHP’s facilities, located near Houston and in Acadia Parish, LA,are at market hubs near the convergence of major gas pipelines. Thecombined working storage at the two facilities is more than 20 Bcf,with potential for additional cavern expansion.

NI Energy Services will own about 78% of MHP following itspurchase of TPC. The transaction is targeted to close by the end ofthe first quarter of 1999 but is expected to be complete by thesecond quarter at the latest. “This acquisition complements NI’sexisting interest in MidTex Gas Storage LLP, in Matagorda County,TX, and underscores NI’s strategy of building a system of assets toserve the natural gas marketplace,” said James K. Abcouwer, NIsenior vice president.

In January MHP subsidiary NE Hub Partners reached agreement withCNG Transmission and North Penn Gas on some issues regarding thedevelopment of NE Hub’s Tioga Gas Storage Project in north centralPennsylvania (see Daily GPI Jan. 19, 1999). In April the FederalEnergy Regulatory Commission (FERC) approved construction of theTioga facility, which NE Hub filed for in 1995. Since then, NE Huband the two intervenors have battled over the amount of insurancerequired before NE Hub could begin construction and drilling. NorthPenn and CNG still are contesting other issues surrounding theproject. Still, all required regulatory approvals for the Tiogaconstruction have been acquired. The planned cavern would provide2.5 Bcf of capacity by 2001. An additional 12.5 Bcf would bedeveloped, providing a total of 15 Bcf of capacity upon thecavern’s completion.

Abcouwer, who heads NI’s Energy Services business unit, saidthat NI has demonstrated its belief in the value ofhigh-deliverability storage for several years now through itsownership position in MidTex and as a partner in MHP. “Salt cavernstorage gives local distribution companies, marketers and end-usersgreater flexibility and response to operational and marketconditions. That value keeps increasing as the marketplace becomesless regulated and rewards this increased flexibility and response.

“We will support the growth of TPC’s gas marketing business asmore and more LDCs open their systems to customer choice and callupon upstream specialists like TPC to help capture every bit ofdependability and value in their gas supply portfolios.”

TPC working capital was about $42 million at Dec. 31. PacifiCorpexpects the working capital balance to substantially decline as gasin storage declines and cash is extracted from the business throughclosing. The sale is subject to the conditions of the Hart ScottRodino Antitrust Improvements Act. NIPSCO and PacifiCorp officialswere unavailable for further comment by press time Wednesday.

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