Pacific Northern Gas announced today that Merrill Lynch Commodities, Inc. ("MLCI") has extended to June 30, 2010 its option to contract for 75 MMcf per day of firm gas transportation service using existing capacity on PNG's Western B.C. pipeline system.
A $1.0 million non-refundable option extension fee has been paid by MLCI to PNG to extend to June 30, 2010 an exclusive option granted by PNG to MLCI in March 2009 to contract for firm gas transportation capacity for a 2 to 5 year primary term, with a right to renew for an additional 2 to 5 year term. MLCI may extend the option period by up to three further six month periods, with payment of $1 million for each extension. If MLCI exercises its option, the PNG pipeline system would be at close to full capacity utilization, generating almost $15 million per year of incremental revenue for the benefit of PNG and its customers. If the option is exercised, the commencement date for the transportation service is expected to be between January 1, 2012 and January 1, 2013. PNG can provide no assurances that MLCI will exercise their option or further extend the option period.
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