Published: 12:01 am, Sat. Sep. 26th, 2015Updated: 11:45 pm
The Lea County Board of Commissioners approved a resolution for the issuance of an Industrial Revenue Bond (IRB) Sept. 24 that will lead to the construction and expansion of a natural gas processing facility and related pipeline in Lea County by Agave Energy Holdings Inc.
The Red Hills II Plant Expansion Project, Series 2015, requires an aggregate principal amount of up to $250,000,000.
“This IRB is for the purpose of inducing Agave Energy Holdings Inc. to acquire and construct the project and to reimburse temporary advances made for capital expenditures from proceeds of the bonds,” said Lea County Manager Mike Gallagher. “Agave Energy Holdings Inc. have a long history of providing economic infrastructure and investment in Lea County.”
During his presentation, J.B. Smith, president of Agave, stated Oct. 1 will mark the 20th anniversary of the company’s operation of two plants in Lea County.
“This expansion project will double our ability to process 235 million cubic feet of natural gas per day at a facility located approximately 22 miles west of Jal near the intersection of Delaware Basin Road and State Highway 128,” Smith said. “The expansion of the facility will increase usage of pipeline connections to Texas, Arizona, California and the Midwest Chicago area.”
Agave estimates 350 temporary construction jobs with a minimum one-year duration but likely a two-year duration will be required. In addition, the company estimates 250 workers will be associated with the plant and 100 with field infrastructure. Their permanent manpower increase is estimated at 21 people – 20 plant, six field and five office personnel.
“We are anticipating 4,550 hours of training with a portion of our personnel in the facilities located at the New Mexico Junior College in Hobbs,” said Smith.
“Not only will Agave Energy’s expansion be an asset to economic development, it will enhance provisions for an annual in-lieu tax payment to be made by the company on behalf of taxing jurisdictions in which the project is located,” said commissioner Ron Black. “Hobbs Municipal Schools, Jal Public Schools, Eunice Municipal Schools, the New Mexico Junior College District, Jal Hospital District, Eunice Hospital District and Lea County will all benefit from this project.”
Smith expects construction to commence as early as February, with interim plant operations commencing by the fourth quarter – October 2016 – and full plant operations by October 2017.
The estimated total annual gross revenue associated with the facility is $375 million.
Agave Energy Company was formed in 1955 as a wholly owned subsidiary of Yates Petroleum Corporation when it acquired portions of Transwestern Pipeline Company’s Southeast New Mexico natural gas-gathering assets.