ScottishPower's US energy subsidiary, PPM Energy, has expanded its gas storage development project in west Texas and added a new site to its storage portfolio through the acquisition of a New Mexico gas storage facility.
The combined investment is expected to be around $120 million and achieve returns of at least 300 basis points above PPM’s weighted average cost of capital.
Expansion of the proposed Waha facility in west Texas – from 7.2 billion cubic feet (BCF) to 9.5 BCF – is a result of favorable geologic testing of the salt cavern site and strong market demand. Waha is expected to be built in two phases and begin operations by December 2007.
PPM also acquired the 4.5 BCF Grama Ridge facility in southeastern New Mexico from ConocoPhillips. PPM plans to expand the Grama Ridge reservoir facility, which has operated since the early 1970s, to 6.0 BCF. Both Waha and Grama Ridge are connected to multiple pipelines in the area.
The Texas and New Mexico developments are part of PPM strategic intention to triple owned gas storage capacity from present levels to approximately 125 BCF by 2010.