Castleton acquires NY power plant from Dynegy

By Jeanine Prezioso and Scott DiSavino

NEW YORK May 1 (Reuters) - Commodity trading merchant Castleton Commodities International LLC (CCI) said on Wednesday it had completed the purchase of a 1,210 megawatt (MW) natural gas and fuel oil-fired electric power plant from Dynegy.

The purchase promises to give the newly minted commodity trading firm access to lucrative New York power markets, one New York-based power trader said on Wednesday.

Castleton declined to comment on the acquisition beyond what it said in a press release on Wednesday.

In December, Dynegy announced as part of a U.S. Bankruptcy Court-supervised auction sales process plans to sell two of its plants, including the Roseton plant to Louis Dreyfus Highbridge Energy LLC (LDH Energy) for $19.5 million.

Castleton bought and renamed the former Louis Dreyfus Highbridge Energy, which was majority owned by French commodity conglomerate Louis Dreyfus Group in October.

The Roseton facility is located in Newburgh, New York, about 60 miles north of New York City, has two 600-MW units built in 1974 and can use natural gas or oil to generate steam to turn a turbine.

Power prices in the Hudson Valley, where Roseton is located, are higher than the rest of upstate New York, and Castleton can make money selling power into the market as it waits on the potential shutdown of Entergy Corp's 2,037-MW Indian Point nuclear plant by 2016, the trader said.

New York Governor Andrew Cuomo wants Indian Point to shut when its operating licenses expire in 2013 and 2015. He has put in motion plans to replace the power if the plant shuts.

If that happens, the Roseton site, which already has access to a natural gas pipeline and transmission lines, will be much more valuable for the construction of a new plant, the trader added.

This is CCI's third power generation asset acquisition and the company "will continue to pursue additional investments in this space," said Herbert Quan, vice president in the firm's asset investments business in the press release.

The Stamford, Connecticut-based company has been in energy asset acquisition mode since the beginning of the year.

In January, Castleton announced that it had acquired 180 oil and gas wells, 150,000 net acres in mineral leases, a gas processing facility and a 262-mile gas gathering system from Houston-based Patara Oil & Gas.

In February, it announced plans to acquire and operate more than 500 natural gas wells, some 44,400 acres in mineral leases and 200 miles of related gathering and transport pipelines in Tuscaloosa County, Alabama called Robinson's Bend Field from Constellation Energy Partners LLC.

Castleton is partly owned by DF Energy Acquisition LLC, a private investment vehicle owned by Glenn Dubin. Dubin also co-founded hedge fund Highbridge Capital Management, which he sold to JPMorgan Chase & Co.

Investment manager Paul Tudor Jones who owns Tudor Investment Corp, also has a stake in Castleton through an investment vehicle created through a family trust. The same is true for hedge fund manager Timothy Barakett and the chairman and CEO of Continental Grain Company, Paul Fribourg.