NorthWestern Energy has purchased natural gas production interests in the Bear Paw Mountains from NFR Energy for $19.5 million.
The Bear Paw Basin purchase includes approximately 600 producing wells and two connected gathering systems with more than 400 miles of pipelines in Blaine, Chuoteau, Fergus and Hill counties, NorthWestern said in announcing the purchase.
The purchase is a part of NorthWestern's effort to control, more of its supply of natural gas.
“We are working to acquire our own supply of electricity and gas, ” said Butch Larcombe, a corporate communications specialist for NorthWestern.
NorthWestern hopes to return to the business model used by its predecessor company, Montana Power Co. Montana Power operated most of its own supply until the late 1990s, when Montana deregulated its utilities.
“This acquisition is part of our strategy to provide our Montana natural gas customers with a regulated source of proven supply from within our region that should help provide price stability to the gas portfolio for many years, ” said CEO Bob Rowe. “We are focused on traditional gas assets with longer and more stable production lives.
“Natural gas is an efficient, reliable and cost-effective heating source, ” Rowe said.
“Our customers expect us to provide them with good value, and we believe this investment in Montana provides very good long-term value, ” he said.
When NorthWestern has to purchase gas from suppliers, there can be massive fluctuations in prices, he said.
Larcombe said 14 people work at NFR Energy. All were offered positions with NorthWestern, and 10 accepted. Others retired or made other plans, he said.
"Having those employees stay with us will provide us with institutional knowledge," he said.
Starting Oct. 1, NorthWestern will include the cost of service for the Bear Paw Basin properties as part of its monthly natural gas supply rate adjustment.
NorthWestern will file with the Montana Public Service Commission for full review of the costs.
This acquisition is expected to provide natural gas to ratepayers for under $4 a dekatherm for at least five years.
NFR is a privately held company with gas and oil interests in Texas, Utah, North Dakota and, until now, Montana.