NorthWestern buys Devon's Hi-Line facilities

Energy NorthWestern Energy Corp. has agreed to purchase Devon Energy Co.'s natural gas production interests in the Bear Paw Basin.

A NorthWestern spokesman said the purchase is part of the company effort to create "vertical integration," meaning the company will both produce and transmit natural gas.

The purchase includes Devon's 82 percent ownership in Havre Pipeline Co. of Chinook, the company announced Tuesday.

NorthWestern spokesman Butch Larcombe said 48 employees are affected by the sale. No decision has been made on how many will join NorthWestern, stay with Devonan Oklahoma City-based operation, or move on, he said.

By owning its own production facilities, company officials said, they can better protect customers from the swings in natural gas prices.

"We're pleased to add another natural gas asset to our mix of resources that serve Montana customers for many years to come," said CEO Bob Rowe. "We believe this purchase adds value, reliability of supply and future long-term rate stability for our customers. In addition, the purchase of the majority interest in the Havre Transmission Pipeline will provide access to additional sources of natural gas necessary to meet future needs."

Larcombe said when gas prices are lower, as they are now, it is easier for the company to purchase gas production facilities.

Vertical integration is the kind of system that was used by NorthWestern's predecessor company, Montana Power Co., he said.

While there is no indication that gas prices will soon rise, owning its own facilities "seems like the much better course of action for the company and our customers," he said.

NorthWestern proposes to acquire an interest in approximately 916 producing wells and connected gathering systems with more than 82 miles of transmission lines, 576 miles of gathering lines, 21 compressors in Blaine, Choteau and Hill counties, Larcombe said.

This purchase will provide NorthWestern with about 28 percent of its gas load in Montana, he said.

In September, NorthWestern Energy purchased production interests in the Bear Paw Mountains from NFR Energy for $19.5 million.

That purchase included approximately 600 producing wells and two connected gathering systems with more than 400 miles of pipelines in Blaine, Chouteau, Fergus and Hill counties.