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Odessa power plant bought for $350M - Odessa American: Business

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Odessa power plant bought for $350M

Buyer Vistra Energy touts low-cost Permian natural gas

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Posted: Friday, July 7, 2017 5:45 am

The parent company for TXU Energy and Luminant will acquire an Odessa gas-fired power plant for $350 million in cash from a unit of Koch Industries in a deal that forecasts continued abundance of Permian Basin natural gas at a low price.

Executives of the parent company, Vistra Energy, said acquiring the 1,054 megawatt combined cycle combustion turbine power plant will provide access to the “deeply discounted gas supply” from the Permian Basin at a nearly 60 percent discount to the cost of building a new plant. CEO Curt Morgan described the plant, in the 2200 block of the East Interstate 20 service road, as “an efficient, well-maintained asset that will provide critical flexible generation capabilities to Luminant’s ERCOT portfolio.”

“Perhaps even more important, the Odessa plant brings geographic diversity to the Luminant fleet, as it is ideally situated in West Texas to capture the current natural gas price advantage in the Permian Basin,” Morgan said in a prepared statement. “We expect this price advantage to continue for the next several years until adequate pipeline infrastructure is constructed to transport the large volumes of associated gas out of the region."

The Permian Basin today produces more than 8 billion cubic feet per day of natural gas, information from the Energy Information Administration details. That production is projected to grow and, with the deployment of more wind and solar generating facilities, continue to drive the retirement of coal-powered plants in Texas while lowering electricity costs and decreasing carbon emissions.

Today, gas-fired plants make up more than half of the generation capacity on the grid overseen by the Electric Reliability Council of Texas.

Koch Energy Services announced the purchase of the plant in October 2013 from a private equity group that bought the plant in 2011. That group, Energy Capital Partners II, purchased the plant for $335 million.

The plant began commercial operation in 2001.

Vistra Energy pointed to the opportunities to bring in more natural gas to the plant via access to three pipelines, to decrease the frequency of routine maintenance shutdowns and to reduce harmful emissions from the plant.

The deal is subject to regulatory approval.

The Ector County Appraisal District estimated the facility’s taxable value in 2017 as more than $315 million, which includes the structure, land and assets.

In May, Vistra Energy announced buying what will be a 180-megawatt Upton County solar plant that is set to become the second largest in the state when it opens in summer 2018.

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