PAA Natural Gas Storage buys Southern Pines storage facility
PAA Natural Gas Storage has entered into a definitive agreement to acquire SG Resources Mississippi. The primary asset of SG Resources is the Southern Pines Energy Center natural gas storage facility. Total consideration is approximately $750 million. Subject to regulatory approval, the transaction is expected to close during the first quarter of 2011.
Southern Pines is a FERC-regulated, high-performance, salt-cavern natural gas storage facility located in Greene County, Mississippi–approximately 60 miles north of Pascagoula and 30 miles east of Hattiesburg. The facility was placed in service in 2008 and three caverns are currently in operation. The facility is permitted for 40 billion cubic feet (bcf) of working capacity from four storage caverns. The fourth cavern is currently being drilled and the facility has the capacity for further expansion, subject to permits and market demand. Southern Pines has an aggregate of 48,000 horsepower of compression and is permitted for peak injection and withdrawal rates of approximately 1.2 bcf and 2.4 bcf of gas per day, respectively. Southern Pines connects directly or indirectly to eight major natural gas pipelines servicing the Gulf Coast, Northeast, Mid-Atlantic and Southeastern markets.
"Southern Pines' strategic location and excellent pipeline connections provide an opportunity to optimally serve the Southeast market–one of the fastest growing gas-fired power generation markets in North America," said Greg L. Armstrong, chairman of PAA Natural Gas Storage. "Additionally, Southern Pines has substantial ongoing organic growth potential, underpinned by a strong portfolio of long-term firm storage contracts."
Armstrong noted that Southern Pines is fully contracted for the 2011/2012 and the 2012/2013 storage seasons and is estimated to have approximately 85% and 70% of projected working capacity contracted for the 2013/2014 and the 2014/2015 storage seasons, respectively.
Comments