NorthWestern Energy Corp. has increased its natural gas holdings in northern Montana’s Bear Paw Basin by acquiring some assets from Devon Energy Corp.
According to the South Dakota-based utility, the assets have an estimated 64.6 Bcf net of proven gas reserves, with about 5.6 Bcf of production expected this year. Production would make up an estimated 28% of NorthWestern’s current annual gas load in Montana.
The purchase is consistent with NorthWestern’s strategy to incorporate proven natural gas production resources into its regulated natural gas supply portfolio, said CEO Bob Rowe. The gas assets will serve Montana customers “for many years to come. We believe this purchase adds value, reliability of supply and future long-term rate stability for our customers.”
The Devon purchase is expected to result in a 20-year levelized price for customers of about $4.10/Dth.
Included are more than 82 miles of transmission lines, 576 miles of gathering lines and 21 compressors in Blaine, Choteau and Hill counties. The purchase also would include Devon’s 82% stake in the Havre Pipeline Co. LLC, which NorthWestern would need to obtain a regulatory waiver to complete.
Purchasing the majority stake in the pipeline “will provide access to additional sources of natural gas necessary to meet future needs,” Rowe noted.
Once the purchase is completed, expected later this year, NorthWestern’s annual natural gas supply load in Montana would be comprised of about 37% owned-and-regulated production.
NorthWestern last September bought some Bear Paw Basin gas properties, and it also owns gas assets in the Battle Creek Field that extend from the Missouri River north to the Canadian border. Pipeline assets associated with the gas production include Havre Pipeline, Bear Paw, Willow Creek, Lodge Creek and Battle Creek gathering systems, all in north-central Montana.
The Bear Paw assets acquired last year overlap some of the Devon properties (see Daily GPI, Sept. 5, 2012). The company said then gas to ratepayers would be provided at a cost of less than $4.00/Dth for at least five years.
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