NorthWestern Energy has purchased a majority interest in a natural gas production area in Blaine County, saying the move will help it guard against swings in prices.
“Owning natural gas reserves is intended to provide customers with a source of rate-based energy that helps hedge against price volatility,” said Bob Rowe, NorthWestern's president and chief executive officer. “We are excited that we were able to purchase this relatively small production field which already serves our natural gas customers under a soon-to-expire purchase agreement.”
NorthWestern Energy purchased the interest in the Battle Creek natural gas field from a private owner, the company said in the release.
NorthWestern paid $11.4 million cash for the majority interest in the Battle Creek Field assets including the gathering system. The company funded the transaction through its revolving credit fund, which has about $160 million left after the purchase.
Changes in state law made by the 2009 Legislature allowed the company to acquire natural gas production and gather resources and include them in its rate base, subject to approval by the state Public Service Commission.
Rowe said buying the gas production interest is intended to be used for its rate base, rather than for use in gas-generated electrical production facilities, adding that the Battle Creek interests are a natural fit for that.
“It is both in our service territory, near Havre, Montana, and connected to our existing natural gas system,” he said. “In addition, acquiring this well-defined and established producing field is consistent with our low risk profile by staying away from exploration.”
According to the press release, the reserves at Battle Creek are estimated at 7.6 billion cubic feet of natural gas, with an annual net production estimated at .5 billion cubic feet. That would provide abut 2.2 percent of NorthWestern’s annual natural gas consumption in the state.