By the OGJ Online Staff
HOUSTON, Apr. 27 -- Continuing its convergence strategy, gas distribution company Peoples Energy Corp. acquired interests in producing gas and oil wells in South Texas for $120 million.
Separately, the Chicago-based Peoples announced it will build a new 330-Mw power plant with partner Exelon Generation, an affiliate of Exelon Corp.
Peoples purchased 100% of Sierra 1996-I LP's interests in 28 wells, which will double Peoples' current proved reserve base. Sierra is an EnCap Investments affiliate. The wells produce an average of 55 MMcfd. The well and the interests are in 11,500 gross acres of developed and undeveloped oil and gas leasehold.
The producing properties, which are 91% gas will be operated by Peoples Energy Production.
"With this acquisition, we have made significant progress toward our long-term goal of becoming a top-fifty owner of natural gas reserves," said Richard Terry, CEO.
The purchase puts the company's proved reserves at 130 bcf as of Mar. 30, 2000. Peoples began buying gas reserves and producing wells in 1998 because it's a "good business" to be involved in, said a spokesman.
Separately, Peoples Energy said it will build a 330-Mw peaking plant in Chicago with partner Exelon Generation. And five new 150 Mw peaking units will be online in Illinois by June 10, said Curtis Cole, vice-president of power generation.
"We are aggressively positioning ourselves for growth on a national basis," he said. "We are evaluating the purchase of existing assets, green field and brown field development opportunities."
Peoples diversified into the power business in 1999 with its first 600-Mw peaking Elwood facility in Illinois with partner Dominion Resources. Peoples also has air permits for additional 2,500 Mw at the same location. Peoples has a long term marketing agreement with Aquila Inc. for 600 Mw of power.
