Earlier this month, the Dallas-based natural gas transportation and processing company announced an agreement to sell its assets in Mississippi, Alabama and South Texas for $220 million to Southcross Energy LLC. Crosstex’s assets in Mississippi and ALabama consist of about 780 miles of intrastate gathering and transmission pipelines. The South Texas assets consist of about 1,400 miles of intrastate gathering and transmission pipelines.
Proceeds from the sale will be used to pay down more than $200 of the partnership’s debt. This will satisfy the targets for debt reductions in Sept. 2009 and Dec. 2009 established in recent amendments to its debt facilities, Crosstex said in a statement.
“The sale of our Mississippi, Alabama and South Texas assets enables us to strengthen our balance sheet as we pursue our strategy to increase liquidity, reduce leverage and improve profitability,” said Crosstex president and CEO, Barry E. Davis in a news release. “We continue to focus on the growth of our strategic assets in North Texas and Louisiana, as well as our treating business, and remain committed to being a premier provider of midstream energy services.”
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The Energy Information Administration, in its Annual Energy Outlook 2004, estimates that natural gas demand in the United States could be 31.41 Tcf by the year 2025. That is an increase of 38 percent over 2002 demand levels.
The EIA expects residential energy demand to increase 25 percent between 2002 and 2025. Residential use of natural gas is expected to increase by 1.5 percent per year from 2002 to 2010 and 0.9 percent from 2010 to 2025, increasing 25.5 percent from 2002 to 2025. Residential natural gas consumption accounts for 22 percent of all consumption in the U.S.
Probably the most important long term driver of natural gas demand in the residential sector is future residential heating applications. Between 1991 and 1999, 66 percent of new homes, and 57 percent of multifamily buildings constructed used natural gas heating. In 2003, 70 percent of new single family homes constructed used natural gas. While these new homes being built are generally increasing in size, the increasing efficiency of natural gas furnaces used to heat them compensates for the increased square footage to be heated. In general, however, the increase in the number of new homes using natural gas for heat over the next 20 years is expected to provide a strong driver for residential natural gas demand.