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LUB Receives Proposal for Sale of Gas Gathering System

 

The Lamar Utility Board is considering an offer from Strachan Exploration, Inc., to take over the light plant’s unused gas gathering system. The discussion centered on the status of the board’s pipeline system and Strachan’s shut-in gas wells south of Lamar.

Stephen Strachan and several members of his business operation made the proposal to the board during their August 29th meeting.  Strachan Exploration owns and operates a system of gas wells south of Lamar as well as in McClave and Haswell.

Strachan told the board his company has seven gas wells in Signal Hill, North Barrel Springs and Barrel Springs that are shut-in and not operating. Their lines make up 95% of the production hooked into the Lamar Utility Board line which also is not operating now that the power plant is not functioning.  He said those idle wells still pay property taxes, require insurance payments and require state mandated maintenance, which is a drain on finances.  Strachan observed that the LUB is in a similar situation with its pipeline gas gathering system.

He proposed that his company acquires all right, title and interest of the Lamar utility gas board gathering system for one dollar and other valuable considerations.

Some of those areas include:

Savings for the utility board and their base rate payers on the budgeted cost of operating the gas line, estimated at over $100,000 a year, relieve the board of all ownership liability and maintenance of the gas line, converting the gas line into private ownership that would pay taxes which would benefit the county, help create new jobs and income taxes from the line’s reactivation and revive the payments of royalties from the gas production to the mineral owners including some 75 family and individuals. Should the Lamar Utility Board return to natural gas use to generate electricity in the future, an agreement between both parties could be negotiated.

Lamar Utilities Board chairman, Doug Thrall, asked the company for options on the proposal which could be reviewed. The City of Lamar will need to be briefed on the proposal before any action could be taken on the transfer of rights for the gas gathering system.

Light Plant Superintendent, Houssin Hourieh, provided the July financial report that showed total operating revenue for July is $1,640,004 with operating costs at $1,382,109 resulting in gross operating income of $257,895. When the non-operating revenues and expenses are taken into consideration, there is a net income of $100,430 for the month.  Year to date comparisons with last year shows that when compared to 2016 revenues from retail sales are up $661,725 or 8% comparing July 2017 to 2016 and overall operating expenses are up approximately $431,328 or 6% resulting in a net income of $446,033 for the year.

By Russ Baldwin

Filed Under: City of LamarConsumer IssuesCountyEconomyFeaturedUtilities

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