PAA Natural Gas Storage has signed a definitive agreement to acquire SG Resources Mississippi's salt-cavern gas storage facility for $750m.
The primary asset of SG Resources is the FERC-regulated Southern Pines Energy Center natural gas storage facility (Southern Pines), located in Greene County, Mississippi.
The transaction is expected to close during the first quarter of 2011, subject to regulatory approval.
The facility, which began its operation in 2008, has three caverns in operation, with a fourth under way.
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 connects directly or indirectly to eight major natural gas pipelines servicing the Gulf Coast, Northeast, Mid-Atlantic and Southeastern markets.
PNG has arranged financing of $800m, including $600m of equity to fund the purchase price, closing costs, and the first 18 months of expected expansion capital.