No opposition to Chevron plan to sell Aitken

Facility is B.C.'s main storage venue for natural gas
Scott Simpson
Vancouver Sun
Saturday, December 15, 2007

Chevron Canada's application to turn B.C.'s main natural gas storage facility into a saleable asset is meeting virtually no opposition, according to documents on file with the B.C. Utilities Commission.

Earlier this year the BCUC granted Chevron's Aitken Creek facility, the only world-class gas storage venue in the province, exemption from regulation on the price it charges producers to store gas coming out of northeastern B.C.'s gas patch.

The BCUC ruled that Aitken Creek was a public utility -- but lacked market power to unduly influence gas pricing in B.C.

The approximate value of the facility, which has no counterpart in B.C., is $1 billion, and one potential buyer estimated Friday that about $420 million worth of gas will annually move through Aitken Creek. The facility holds gas for pipeline delivery to southern B.C. and to United States markets as far east as Chicago.

Chevron acquired Aitken Creek, which includes an underground storage cavern that originally held a gigantic natural gas deposit, as part of a larger purchase of Unocal Corp. in 2005. It has since decided the asset does not conform to its Canadian business model.

In preparation for sale, Chevron is asking BCUC permission to create a separate company to operate Aitken Creek -- a move that would then allow it to sell the facility to a new owner.

They are asking the BCUC to approve its proposals "at its earliest convenience."

In a final submission this week to the BCUC, Chevron notes that only two parties, Terasen Gas and the B.C. Old Age Pensioners took the time to provide written comment on the proposed transaction -- and documents on file with the BCUC show that neither party oppose the proposed arrangements.

The facility has a working capacity of 71 billion cubic feet and could be expanded by about 40 per cent.

The National Energy Board has noted that gas storage is "extremely limited in B.C." -- consisting of Aitken and a small liquefied natural gas (LNG) facility on Tilbury Island near the mouth of the Fraser River.

Several companies have been proposed as potential buyers but only one -- a new Alberta-based venture -- has publicly announced its intentions.

Chevron officials did not respond to The Vancouver Sun's request for an interview.

"There is no question that it is a world-class facility," said Rex Kary, founder of prospective Aitken buyer Moneta Energy. "The volume of gas handled there is substantial."

Kary said Moneta was formed a few months ago with the specific intention of acquiring gas storage assets as long-term investments.

"It comes from a fundamental belief that North America is depleting its natural gas reserves," Kary said. "There is not as much gas that can be delivered as easily as several years ago yet the demand is still increasing. What's starting to happen is that the volatility in the price, the price difference between summer and winter, is becoming greater."

ssimpson@png.canwest.com

© The Vancouver Sun 2007

UNOCAL - Disposition of Aitken Creek Gas Storage

Recently formed Moneta Energy Services says it intends to focus on developing natural gas storage opportunities.

Led by Rex Kary, a gas marketing services veteran, Moneta is focused on developing and/or acquiring infrastructure within the Canadian energy sector to extract additional value by trading the commodities that it stores and ships in its own assets.

Moneta is backed by Yorktown Energy Partners LLP, a $2.7-billion private equity fund solely devoted to investment in energy assets, and E&C Capital, the energy and commodities private equity group of BNP Paribas, a global bank that is a leading financial institution.

Moneta intends to use this capital to acquire and build infrastructure including storage facilities and pipelines to facilitate trading in gas futures.

“We have been given a mandate to develop a Canadian energy infrastructure organization,” Kary said in a statement. “Our partners, who are in the business of investing significant sums of money with known management teams, want us to become a significant natural gas storage player in Canada.”

One component of the company’s business plan is to partner with producing companies by purchasing their output as well as depleted gas fields for further development into underground storage.

The company will also work with utility companies to build storage in underground salt caverns and manage gas price exposure by optimizing the risk associated with futures trading.

Moneta said its strategy would eliminate environmental risk of abandonment for producers, while also monetizing remaining reserves to accelerate returns from a particular field.

Besides Kary, who has as president and chief executive officer, was a founder of Continental Energy Marketing in 1989, Moneta’s executive team includes: Bob Tomes as chief financial officer, with over 25 years of experience working on finances, strategy, treasury management, budget modeling and business development; Brad Johns as vice-president of operations, who has been involved in the technology sector for over 17 years, including focusing the last few years exclusively in the oil and gas sector; Glen Gill, vice-president of business development, with over 26 years of energy industry experience, including founding the first producer-owned and unregulated gas storage facility in Canada; Linda Wiebe, with five years experience at Continental Energy; Chris Richards as vice-president of trading optimization, with over 12 years of marketing, operations management and business development, including handling gas trading at AltaGas Income Trust; and Bob Stepan as vice-president of corporate development, with over 22 years of business experience in the energy sector, including positions with BC Gas Inc. and Union Gas Limited, the latter working in the storage planning group.

CALGARY, ALBERTA--(Marketwire - Dec. 14, 2007) - Recently-formed Moneta Energy Services has entered the dynamic fast pace natural gas marketplace to capture value embedded in the commodity by helping producers shed depleted oil and gas fields and better deal with natural gas prices that have recently seen wild fluctuations. The new Canadian-based company, founded by gas marketing services veteran Rex Kary, is focused on developing and/or acquiring infrastructure within the Canadian energy sector to extract additional value by trading the commodities that it stores and ships in its own assets.

Moneta is backed by the financial strength of its partners - Yorktown Energy Partners LLP, a $2.7 billion private equity fund solely devoted to investment in energy assets, and E&C Capital, the energy and commodities private equity group of BNP Paribas, a global bank that is a leading financial institution in the energy and commodity sectors. Moneta will use this capital to acquire and build infrastructure including natural gas storage facilities and pipelines to facilitate trading in gas futures.

"We have been given a mandate to develop a Canadian energy infrastructure organization," says Rex Kary, who leads Moneta's hand-picked management team. "Our partners, who are in the business of investing significant sums of money with known management teams, want us to become a significant natural gas storage player in Canada."

One component of the company's business plan is to partner with producing companies through the purchase of their gas production as well as their depleted gas fields, further developing them into underground storage. The company will also work with utility companies to build storage in underground salt caverns and manage their gas price exposure by optimizing the risk associated with trading in gas futures.

Moneta plans to use underground reservoirs to store gas by putting it back into the ground in order to sell the gas in a period of greater demand and higher prices.

When Moneta takes over these underground reservoirs, it eliminates the producer's environmental risk of abandonment and, more importantly, monetizes the last remaining reserves, accelerating the producer's return from a particular gas field. "Their dollars are best spent drilling and finding new reserves, not trying to squeeze the last ounce of gas from the ground," Kary says. "We, on the other hand, need the gas in the ground to operate the storage field. It is a win-win relationship."

Alberta is an international hub for gas production, exporting 13 billion cubic feet of natural gas daily, with more physical gas traded in Alberta than any other location in North America. A simple example of gas storage utilization for trading in the commodity market is purchasing lower priced gas in summer months and selling during peak winter months.

Moneta Energy Services also offers producers and industrial users much needed assistance in managing gas prices at a time of very low or very high prices in the marketplace. "We offer producers and large industrial/commercial users energy management solutions so they aren't exposed to wide price fluctuations and can manage their business much better," says Kary

"The price of gas in the last few months has been very low and some wells can no longer produce economically, creating a financial hardship for many natural gas producers," Kary says. "With our financial strength, we can structure a variety of arrangements with producers to help ease the pain of the current low natural gas prices."

Moneta Energy Services Ltd. has combined industry knowledge and expertise with patient and persistent financial depth with a goal to become one of the leading asset-backed energy services companies in North America.

For more information, please contact
Moneta Energy Services Ltd.
Alyn Edwards
(604) 689-5559 or Cell: (604) 908-7231

or

Moneta Energy Services Ltd.
Rex H. Kary
(403) 770-4156
Email: Posted by Arthur Caldicott on 15 Dec 2007