Regency has negotiated definitive agreements with shippers for 800 MMcfd, which is more than 70% of the capacity of the Haynesville Expansion Project. The project would expand Regency's pipeline system in North Louisiana to bring natural gas from the Haynesville Shale -- one of the most active new natural gas plays in the United States -- to market. The agreements are for firm transportation capacity under 10 year contract terms and are subject to conditions including final approval by Regency's board of directors.
Regency is also in advanced discussions with other shippers who have requested transportation volumes exceeding the remaining capacity. Regency has eliminated its obligation for the purchase of 28 miles of 24-inch pipe that is no longer needed for the revised 1.1 bcf/d expansion.
"The major remaining milestone for the project is to finalize financing agreements," said Kelley. "We continue to work with our general partner, GE Energy Financial Services, to secure appropriate funding for the project. Despite challenging market conditions, we have made progress toward securing permanent financing. If financing is obtained, the project is scheduled to be in service by year-end 2009."
Regency continues to acquire the necessary rights of way and environmental permits and clearances. In addition, a construction contractor has been committed to the project, and 98% of the route has been selected and surveyed. Regency is also in the process of forming and executing agreements with downstream market pipelines which will upsize their major pipeline interconnects.
Regency currently has approximately $230 million of purchase commitments related to the Haynesville Expansion Project. Although Regency is aggressively pursuing financing for the Haynesville Expansion Project, there is no assurance that the Partnership will successfully complete financing for the project. If Regency is unable to obtain appropriate financing for the Haynesville Expansion Project, the Partnership will most likely have to temporarily reduce or suspend distributions for the foreseeable future and in addition seek other sources of capital and/or sell assets in order to be able to continue core operations while satisfying its contractual commitments for the Haynesville Expansion Project.
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