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Enterprise, TEPPCO to Jointly Expand Jonah System to 2 Bcf/d

TEPPCO Partners LP and an affiliate of Enterprise Products Partners LP are teaming up to expand the Jonah Gas Gathering System in the Green River Basin of southwestern Wyoming to 2 Bcf/d from 1.5 Bcf/d. The expansion, expected to be completed in 4Q2006, will cost about $200 million.

The joint expansion will begin once TEPPCO's Phase IV expansion of the Jonah pipeline system is completed, which is expected later this month (see NGI, Feb. 14, 2005).

"Since we acquired the Jonah system in 2001, the development of the Jonah and Pinedale fields, which are among the largest natural gas fields in the United States, has provided our partnership with a consistent stream of organic growth projects," said TEPPCO Chairman Lee W. Marshall Sr. "We are nearing completion of the latest expansion of the system to 1.5 Bcf/d and based on the current drilling successes in the area, we already see the need for further expansions by year end."

TEPPCO has dedications for the expansion, "and we believe this project will be strategic for our producer-customers as they formulate their long-term drilling plans and will enhance our ability to serve the growing needs of our customers in the basin," said Marshall.

Under the terms of a letter of intent, Enterprise will provide the capital to fund the expansion and TEPPCO has the option of reimbursing Enterprise, in whole or in part, for the costs and expenses to complete the expansion. The relative value attributable to this expansion and the amount of TEPPCO's reimbursement to Enterprise for the costs to expand the pipeline will determine the relative ownership interests in the joint venture.

"This venture will further extend and support our value chain in the Rocky Mountains, which is important to Enterprise in securing long-term supplies of natural gas to base load our expansion of the Pioneer silica gel plant and the development of the Pioneer cryogenic natural gas processing plant," said Enterprise CEO Robert G. Phillips. The Pioneer expansion is expected to be completed in 3Q2007.

"Investing in the Jonah pipeline system is another step to extend, expand and support our integrated midstream energy value chain in this region," Phillips said. "In total, we expect to invest approximately $2 billion in capital in this region over the next five years through 2010 in energy infrastructure projects which have been recently announced."

Last month, Enterprise entered into a long-term contract to process up to 1.3 Bcf/d of EnCana Oil and Gas (USA) Inc.'s Piceance Basin gas production. In addition, Enterprise signed a letter of intent to buy TEPPCO's ownership interests in the Pioneer silica gel gas processing plant in Opal, WY, giving Enterprise the plant and all of Jonah Gas Gathering Co.'s rights to process gas originating from the Jonah and Pinedale fields (see NGI, Jan. 30).

Currently, Enterprise is expanding the Meeker and Pioneer plants, as well as expanding the western and central segments of the Mid-America pipeline system. It also is constructing a natural gas liquids fractionator and storage facility in Hobbs, NM.

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