Koch Midstream Gathering and Processing and Duke Energy FieldServices took a gander at some of each other’s assets and decidedto make a deal. The companies signed a letter of intent to exchangegas gathering and processing systems in Texas, Mississippi, NewMexico, Alabama and Oklahoma.

Duke will acquire Koch’s gathering and processing systems inSouth Texas and Oklahoma that Koch purchased in November fromDelhi. Koch will acquire Duke’s Black Warrior system in Alabama,the AIM Pipeline in Mississippi and certain gathering andprocessing assets in West Texas and New Mexico. The agreement issubject to certain contingencies; terms were not disclosed. Theexchange is expected to take place in the third quarter.

The rationale behind the deal was to allow Koch to boost itstrading capabilities and knowledge and position activities aroundthe Waha and Henry hubs, said a Koch spokesman. “By having moreassets around these trading hubs, it just makes us – we think – amore efficient operator, and it just helps us gain more knowledge,trading knowledge.” The Alabama assets will help the company reachmarkets in the Northeast as well as the Southeast. He stressed Kochis not leaving Oklahoma, where the company still has its Medfordfractionator.

Duke’s Field Services division has actively building itsmidstream position this year, adding assets in areas where itsexisting systems are concentrated. The Koch assets are an”excellent strategic fit with our existing systems in South Texasand Oklahoma and will significantly expand our operations andservices in these areas,” said Jim Mogg, president of Duke EnergyField Services. “Duke Energy Field Services is continuing itsstrategy of acquiring and optimizing assets in the Mid-continent.Additionally, this transaction greatly advances our expansionstrategy in South Texas.”

In addition to the Koch deal, Duke also purchased Dynegy’s 56%interest in the 85 MMcf/d Roberts Ranch gas processing plant inMidland County, TX, last week. The plant is located 10 miles northof Duke Energy’s Pegasus Gas Plant and five miles west of DukeEnergy’s Parks Booster Station in Midland County.

Field Services also recently completed expansion of twoprocessing plants in North Louisiana and Southeast Texas.Expansions added 100 MMcf/d of capacity at the Minden, LA, plantand 75 MMcf/d at the processing complex in Port Arthur, TX, andincreased capacity of the two Gulf Coast plants from 240 MMcf/d to415 MMcf/d. In addition it recently acquired the Hico-Knowles plantin Lincoln Parish, LA, from Sid Richardson Corp. This plant will beintegrated into Duke’s existing Ruston gathering system to offerproducers a competitive processing alternative in Lincoln Parish.

The company acquired the 85 MMcf/d capacity Haynesville, LA.,processing and fractionation facility and related gas and gasliquids pipeline systems from Dynegy Midstream Services April 20.And in early April, Duke began deliveries into the Perryville Hubin northern Louisiana through a new 4.5-mile gas pipeline and theaddition of 7,500 hp of mainline compression. The expansion enabledDuke to provide an incremental 100 MMcf/d of delivery capacity intothe major pipelines serving the Midwest and Northeast markets. Thecompany also expanded its South Texas gathering and processingcapabilities with the acquisition of the 90-mile Brooks-HidalgoPipeline gas gathering system.

Joe Fisher, Houston

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