Officials at American Electric Power in Columbus, Ohio, said late Thursday they�ve signed a definitive agreement to buy Houston Pipe Line Co., which comprises virtually all of Houston-based Enron Corp.�s extensive Texas intrastate natural gas operations.
That acquisition is to be made through subsidiary AEP Energy Services Gas Holding Co. in the second quarter, pending the usual regulatory approvals. Terms of the transaction were not immediately disclosed by either company.
The pending sale involves essentially all of Enron�s intrastate Texas operations, which have long been a part of the company. Enron officials told OGJ Online that they were not shopping those assets around but responded to a good offer from American Electric Power.
Houston Pipe Line�s intrastate system consists of 4,400 miles of pipeline infrastructure with a throughput capacity of 2.4 bcfd of gas. It also includes the Bammel gas storage field on the Texas Gulf Coast, one of the largest gas storage facilities in North America with a capacity of 118 bcf. That facility serves the massive refining and petrochemical complex along the Texas Gulf Coast as well as Houston-based gas utilities.
Enron did a $28 million expansion of the Bammel field and Houston Pipe Line (HPL) in 1998. The pipeline has connections with multiple gas producing areas in Texas as well as numerous interconnections with other intrastate and interstate pipelines. It is a major provider of natural gas in the Houston area.
�Adding HPL to our natural gas asset portfolio will help us reach our goal of becoming a top 10 gas trader and marketer,� said Paul Addis, executive vice president for American Electric Power (AEP).
�The acquisition will allow AEP to extend its strategy of linking physical asset operations with trading and marketing to provide our customers flexible and tailored energy products,� he said.
In the third quarter of last year, American Electric Power was ranked No. 14 in volume among wholesale US gas marketers, with deals averaging 4 bcfd of gas.
The company also owns and operates more than 38,000 Mw of generating capacity, making it one of the largest US generators of electricity. It is in addition a major wholesale energy maketer and trader, ranking second in the US in electricity volume.
Enron officials did not reveal what they plan to do with the proceeds of that sale. However, they said Enron is comfortable in its position as the top US marketer of gas and electricity.
