Seminole Gas acquires Appalachian assets

A subsidiary of Seminole Energy Services LLC, private Tulsa midstream firm, has acquired 50% interest in Kentucky gas gathering assets owned by Daugherty Petroleum Inc., a subsidiary of NGAS Resources Inc., Lexington, Ky.

By OGJ editors
HOUSTON, July 16
-- A subsidiary of Seminole Energy Services LLC, private Tulsa midstream firm, has acquired 50% interest in Kentucky gas gathering assets owned by Daugherty Petroleum Inc., a subsidiary of NGAS Resources Inc., Lexington, Ky.

The Stone Mountain system has 500 miles of gas gathering lines in Kentucky, eastern Tennessee, and western Virginia. Daugherty Petroleum signed gas marketing agreements with Seminole Energy, which has a 6-month option to buy NGAS’s remaining 50% interest.

Under certain conditions, NGAS will have the right to require Seminole Energy to exercise its purchase option.

Seminole Energy will manage and market gathering system capacity to third parties who desire to move incremental volumes through the system into Spectra Energy’s East Tennessee natural gas pipeline system. Daugherty Petroleum will continue to operate the gathering system under contract to Seminole Energy and deliver 30 MMcfd through it.

The gathering system delivers raw, unprocessed, high-Btu gas to the Rogersville, Tenn., processing plant, jointly owned by Seminole and Daugherty Petroleum, that discharges pipeline quality residue gas into Spectra-East Tennessee.

Recent extraction rate at the plant is 35,000 gpd from 18 MMcfd of gas.

Seminole Energy and Murphy Energy recently completed an NGL storage and rail terminal near the plant that cut logistical costs and hiked netbacks to producers.

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