Duke, Koch Swap Gathering, Processing Assets
Koch Midstream Gathering and Processing and Duke Energy Field
Services took a gander at some of each other's assets and decided
to make a deal. The companies signed a letter of intent to exchange
gas gathering and processing systems in Texas, Mississippi, New
Mexico, Alabama and Oklahoma.
Duke will acquire Koch's gathering and processing systems in
South Texas and Oklahoma that Koch purchased in November from
Delhi. Koch will acquire Duke's Black Warrior system in Alabama,
the AIM Pipeline in Mississippi and certain gathering and
processing assets in West Texas and New Mexico. The agreement is
subject to certain contingencies; terms were not disclosed. The
exchange is expected to take place in the third quarter.
The rationale behind the deal was to allow Koch to boost its
trading capabilities and knowledge and position activities around
the Waha and Henry hubs, said a Koch spokesman. "By having more
assets around these trading hubs, it just makes us - we think - a
more efficient operator, and it just helps us gain more knowledge,
trading knowledge." The Alabama assets will help the company reach
markets in the Northeast as well as the Southeast. He stressed Koch
is not leaving Oklahoma, where the company still has its Medford
Duke's Field Services division has actively building its
midstream position this year, adding assets in areas where its
existing systems are concentrated. The Koch assets are an
"excellent strategic fit with our existing systems in South Texas
and Oklahoma and will significantly expand our operations and
services in these areas," said Jim Mogg, president of Duke Energy
Field Services. "Duke Energy Field Services is continuing its
strategy of acquiring and optimizing assets in the Mid-continent.
Additionally, this transaction greatly advances our expansion
strategy 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 in
Midland County, TX, last week. The plant is located 10 miles north
of Duke Energy's Pegasus Gas Plant and five miles west of Duke
Energy's Parks Booster Station in Midland County.
Field Services also recently completed expansion of two
processing plants in North Louisiana and Southeast Texas.
Expansions added 100 MMcf/d of capacity at the Minden, LA, plant
and 75 MMcf/d at the processing complex in Port Arthur, TX, and
increased capacity of the two Gulf Coast plants from 240 MMcf/d to
415 MMcf/d. In addition it recently acquired the Hico-Knowles plant
in Lincoln Parish, LA, from Sid Richardson Corp. This plant will be
integrated into Duke's existing Ruston gathering system to offer
producers 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 gas
liquids pipeline systems from Dynegy Midstream Services April 20.
And in early April, Duke began deliveries into the Perryville Hub
in northern Louisiana through a new 4.5-mile gas pipeline and the
addition of 7,500 hp of mainline compression. The expansion enabled
Duke to provide an incremental 100 MMcf/d of delivery capacity into
the major pipelines serving the Midwest and Northeast markets. The
company also expanded its South Texas gathering and processing
capabilities with the acquisition of the 90-mile Brooks-Hidalgo
Pipeline gas gathering system.
Joe Fisher, Houston
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