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NorthWestern Energy answers questions on Devon purchase


October 17, 2013

Our customers look to us to provide natural gas and electricity safely, reliably and at the best price possible.

That’s why, after a decade of primarily being a pipes and wires company that had to rely on market purchases, we are purchasing natural gas production fields and electricity generation in Montana.

We are only buying resources that benefit our customers and our shareholders. We have been asking, and continue to ask, the Montana Public Service Commission to include these resources into rates, meaning that the price you will pay for the energy from these resources will be based on the cost of production rather than the prevailing, and often volatile, market price.

We have previously purchased other natural gas properties located on the Hi-Line, and we are currently working through the largest gas production acquisition to-date of Devon Energy’s properties in the Havre area including the company’s majority interest in the Havre Pipeline Company.

On Oct. 4, the PSC held a public meeting on the subject at which members of the public asked a number of questions.

Many of the questions are outside of the jurisdiction of the PSC; however, they are important to the community, and we want to provide answers to the extent that they are known and clarifications where possible.

There were lots of questions regarding royalty payments from various rights holders. There are literally several thousand owners who receive royalty payments, so it’s just not possible in this column to address each individual situation. However, from a general perspective I can explain how we make royalty payments. NorthWestern will assume all royalty agreements and the settlement agreement in effect between Devon and the participating rights holders. All royalty payments will be in compliance with these agreements.

We will also be available following the close of the transactions to answer any specific royalty questions and to further establish our relationship with landowners and rights holders. We also plan to have a representative at the upcoming Montana Land and Mineral Owners meeting in November.

Landowner relationships are important to us. We have a long history of constructive working relationships with landowners. We currently have rights of way throughout Montana to maintain and service electric transmission lines and natural gas pipelines. We work with the individual landowner to maintain access roads and health of their land and resolve any concerns as quickly as possible. We believe strongly in the partnership aspect of our relationship and will continue to bring a strong and long-term stewardship approach to both the land and landowners.

NorthWestern has long provided service to its customers along the Hi-Line and prides itself on being a good corporate citizen. We provide about $2 million annually in community, charitable and economic development activities throughout our service territory and more than $30,000 specifically in the Havre area. Devon has also been a good corporate citizen and we plan to incorporate some of their activities and employees in our existing efforts to facilitate employee volunteerism and community support.

Employees are the life-blood of any company, and we want to retain a quality workforce. While employment offers will be made after the sale is final and employment issues are by their nature very personal, we have posted positions required for the operations of the Bear Paw production and HPC facilities (these positions are only open to current Devon employees). We also made additional open production positions available to the Devon employees. Once the sale is closed and employment offers are accepted, we will be able to provide additional information about our local workforce.

NorthWestern, where it makes sense from the perspective of all our customers, does use contractors to supplement its workforce. The decision largely is based on the type of work needed and the expertise and/or availability of internal resources to complete the work. Decisions on when and what contractors to use are made on a case-by-case basis.

Regarding the exploration or drilling of new wells in the future, this decision will be made on both economics and a full assessment of risks. NorthWestern will consider options to extend the life of its production field if and when cost effective opportunities exist.

If you have further questions that we haven’t answered here, please email them to Corp_Comm@northwestern.com. We are pleased to bring greater price stability to all of our Montana natural gas customers, strengthen our ties along the Hi-Line and look forward to becoming even that much more involved in the Havre area once this sale is completed.

(John Hines is the vice president – Energy Supply at NorthWestern Energy and resides in Helena. He is responsible for electric and natural gas planning, procurement and generation operations and the company's environmental function.)


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