MENTOR, Ohio — Through its subsidiary Penobscot Natural Gas Company Inc., Gas Natural Inc., a holding company operating natural gas utilities serving approximately 70,000 customers in seven states, closed its previously announced acquisition of a leasehold interest in the 189-mile pipeline corridor easement running from Searsport to Limestone known as the Loring Pipeline.
Built in the 1950s, the pipeline was once used to send jet fuel from tanks on the coast to Loring Air Force Base. Loring Development Authority owns the corridor and Loring BioEnergy was leasing the pipeline as part of its plan to build a co-generation power facility at the former base.
On April 17 Gas Natural entered into an agreement with United States Power Fund, L.P., a private equity fund managed by Energy Investors Funds, to place a bid at a public auction on certain assets owned by Loring BioEnergy that were being foreclosed upon by USPF. On June 4 Gas Natural attended a public foreclosure auction and was the successful bidder.
The purchase closed on Sept. 25 for a total consideration of $4.5 million, which was comprised of $2.25 million in cash and 210,951 shares of the company’s common stock valued at $10.67 per share, according to a press release from Gas Natural.
Richard M. Osborne, Gas Natural’s chairman and CEO, commented in the press release, “Maine has long been identified as a strategic growth market due to the low penetration of natural gas as an energy source for power generation, industry and residential use. The predominate energy source in Maine is higher cost oil-based fuels. This acquisition represents a significant investment and expansion of our systems in Maine, and complements our existing service area, as the pipeline stretches from the eastern coast into northern Maine, crossing through our natural gas service area in Bangor.”
Osborne added, “We have successfully converted a former liquid pipeline to natural gas uses in Ohio, and given that experience, we expect we can be equally successful in the recondition and conversion of the Maine assets. The conversion of this pipeline will be done in phases, and we believe will position us well to capture additional opportunities, specifically the industrial base in northern Maine as well as accompanying residential and commercial areas where natural gas is currently not available.”
Gas Natural Inc., a holding company, distributes and sells natural gas to end-use residential, commercial and industrial customers. It distributes approximately 32 billion cubic feet of natural gas to approximately 70,000 customers through regulated utilities operating in Montana, Wyoming, Ohio, Pennsylvania, Maine, North Carolina and Kentucky. The company’s other operations include interstate pipeline, natural gas production, propane and natural gas marketing. The company’s Montana public utility was originally incorporated in 1909. According to the press release, its strategy for growth is to expand throughout the Maine and North Carolina markets while looking for acquisitions that are either adjacent to its existing utilities or in under-saturated markets.
“Congratulations to Gas Natural on its acquisition of the pipeline lease,” Carl Flora, Loring Development Authority’s president and CEO, commented. “The availability of natural gas is a key factor for Aroostook County’s economic future. The Loring Development Authority is looking forward to the successful conversion of the former jet fuel line.”
