Dynegy Inc Expands Via Acquisitions in UK
Sep 1, 2001 12:00 PM
Dynegy Inc has announced a major expansion of its energy convergence business through the purchase of natural gas storage facilities and related assets in the United Kingdom. Dynegy has agreed to acquire BG Storage Ltd (BGSL), a wholly owned subsidiary of BG Group plc. BGSL's UK assets consist of 30 wells with five offshore platforms, nine salt caverns, approximately 19 miles (32 kilometers) of pipelines, and an onshore natural gas processing terminal.
Under terms of the purchase agreement, Dynegy will pay about $590 million (421 million pounds) for BGSL and its existing assets. The transaction is subject to approvals from The Gas and Electricity Markets Authority and The Department of Trade and Industry and clearance from the Office of Fair Trading in the UK. It is expected to close during third-quarter 2001. After the transaction, BGSL and its 260 employees will become part of Dynegy Europe Ltd.
Two of the facilities included in the transaction, Rough and Hornsea, are key providers of physical storage space in the UK natural gas market and are used by approximately half of the UK's natural gas shippers. Rough, an offshore depleted natural gas field, has a deliverability rate of 1.5 billion cubic feet (Bcf) per day (455 gigawatt hours per day). The deliverability rate of Hornsea, an onshore salt cavity installation, is 620 million cubic feet (MMcf) per day (195 GWh/day). The two facilities can store 111 Bcf of natural gas.
As part of the purchase agreement, Dynegy will also acquire the Easington natural gas processing terminal. This facility processes Rough and third-party natural gas streams and delivers into the UK natural gas transportation network. BGSL previously announced plans to develop the Aldbrough storage facility, a salt cavern with an expected storage capability of 6 Bcf and deliverability rate of 600 MMcf/day (185 Gwh/day). Dynegy Europe will examine the feasibility of Aldbrough's development plans in the future.
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