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Loews Completes Gulf South Purchase, Begins Integration with Texas Gas

Loews Completes Gulf South Purchase, Begins Integration with Texas Gas

Loews Corp.'s Owensboro, KY-based subsidiary TGT Pipeline LLC has wrapped up its $1.136 billion purchase of Gulf South Pipeline LP from Entergy-Koch, which also is in the process of being sold. The addition completed just before the end of 2004 gives Loews, a company with diverse business interests, a second major gas pipeline operation and a much larger presence in the energy industry.

Loews said TGT funded the purchase price with $575 million of proceeds from an interim loan and $561 million in cash from the parent company. The deal follows Loews' $1.045 billion purchase of Texas Gas Transmission from Williams last year (see NGI, May 19, 2003). Subsidiary Texas Gas will take over operations of the 8,000-mile Gulf South pipeline, which transports 2 Bcf/d (with a capacity for up to 2.8 Bcf/d) and provides a total working gas storage capacity of 68.5 Bcf. Together the two pipelines give the company about 14,700 miles of interstate gas transmission across 11 states with total throughput capacity of 5.6 Bcf/d.

Gulf South and TGT are geographically contiguous, but are at distant ends of the operational spectrum, said Loews CEO James Tisch when the company first announced the purchase in November (see NGI, Nov. 29, 2004). "Gulf South operates in a highly competitive area, and is really a gathering system, as opposed to TGT, which is operating under more of a rate of return...a regulatory environmental distribution system. There's really no significant overlap at all."

TGT and Gulf South offer synergies, however, that will improve their overall efficiency, Tisch said. He did not offer any figures or timeline as to when the cost efficiencies would take effect, but said he hoped the "sister" pipelines would be successfully integrated within a year.

TGT's interstate pipeline system delivers 2.8 Bcf/d markets in the South and Midwest. Its pipelines extend 5,800 miles through nine states and six metropolitan areas: Louisiana, Texas, Arkansas, Mississippi, Tennessee, Kentucky, Illinois, Indiana and Ohio, and the cities of Memphis, Louisville, Evansville, Indianapolis, Dayton and Cincinnati. In addition, its underground storage fields in Kentucky and Indiana currently provide a certified storage capacity of 178 Bcf and 55 Bcf of working gas.

The new pipeline division joins Loews' diverse business units in the hotel, insurance, tobacco, drilling and clock distributing industries. Loews other subsidiaries include the following companies: CNA Financial, which is one of the largest property casualty insurance corporation in the United States; Diamond Offshore Drilling, one of the world's largest drilling contractors; Loews Hotels, a U.S. and Canadian lodging company; Bulova Corp., a distributor and marketer of watches and clocks; and Lorillard Inc., America's oldest tobacco company.

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