ScottishPower (SPW) recently announced that its competitive U.S. energy business, PacifiCorp Power Marketing Inc. (PPM) has agreed to acquire, in a purchase of assets, Aquila Corp.’s Katy gas storage facility in Texas and four other gas storage development projects for a cash consideration of $180 million. The acquisition is subject to regulatory review under the Hart-Scott-Rodino Act. The acquisition is expected to be earnings enhancing in the first full year of ownership.
PPM’s CEO Terry Hudgens said, “The Katy facility is a proven asset with an excellent location in a major gas network hub, a good customer base and long-term contracts for a significant proportion of its capacity. The acquisition is consistent with our previously stated strategic priorities which include the growth of gas storage and hub services in a selective and disciplined way, and complements PPM’s existing operations in the Canadian basin enhancing its ability to serve the western market.”
The Katy facility, located 20 miles west of Houston, has a working capacity of 21 billion cubic feet (Bcf). Katy currently has 16 Bcf of the 21 Bcf of working gas capacity under firm contract. It has been in operation for more than 10 years, has 14 interconnects to 13 different pipelines and serves gas storage capacity to a diversified customer base throughout the region. PPM’s role will be to provide gas storage services for local distribution companies, generators and industrial users, marketers/traders and producers.
In January 2002, a 40 percent interest in the Alberta Hub natural gas storage facility in Alberta was acquired, making a contribution to the first quarter earnings in 2002/03, and is performing well. “Market conditions in the gas business present an opportunity for growth for PPM and hub services provide flexibility for customers,” said Hudgens. “By establishing a base of business in Alberta and now in this key basin for stored supply in Texas, PPM will be able to deliver a much-needed product to western customers and deliver value to shareholders”.