Depressed gas liquids prices don’t affect the need foradditional liquids transportation capacity in the Gulf of Mexicoregion in the view of two companies that last week joined to expandLouisiana pipeline facilities.

Shell Oil affiliate Tejas Natural Gas Liquids LLC and EnterpriseProducts Partners L.P. formed joint venture Entell NGL Services LLCto develop a gas liquids transportation and distribution system.Entell’s initial asset base will include substantially all ofEnterprise’s existing pipeline facilities in Louisiana. Inaddition, Entell will create a pipeline system linking storage atBreaux Bridge, LA, to Mont Belvieu, TX. Entell anticipates thesystem being capable of distributing products from key NGL sourcesin southern Louisiana directly to major NGL markets, including thelower Mississippi River corridor, Dixie pipeline, Lake Charles, LA,and Mont Belvieu.

Entell is a limited liability company in which Enterprise andTejas each have a 50% interest. Entell owns 250 miles of pipeconnecting several market centers in Louisiana, with the capacityto move 80,000 barrels/d. Planned expansions will boost that numberto more than 110,000 barrels/d.

“The synergies that Tejas’ growing NGL production andEnterprise’s asset base bring to Entell support Tejas’ desire togrow its downstream NGL storage and distribution systems bothwithin the Louisiana market and through linkage to Mont Belvieu,”said Curtis Frasier, executive vice president of Tejas Energy.

“Enterprise has been a natural gas liquids fractionation,storage and pipeline service provider in southern Louisiana andMont Belvieu, TX, for more than 25 years,” said O.S. Andras,Enterprise president. “Combining our Louisiana pipeline system withTejas through Entell creates a link between these two major marketareas.”

Mike Falco, senior vice president of business management forEnterprise, said Tejas has been one of the biggest shippers on itssystem and predicted with all the development in the Gulf of Mexicogrowth on the system will be “significant.” Backing from Tejasmakes building/buying a line back to Mont Belvieu more of areality. Falco said Entell hopes to accomplish that by the end ofthe year.

Falco said there are no current plans for similar ventures.”This is the biggie. We’ve been working on this for the better partof the year. This is the alliance that we’ve chosen and that wethink will work for us.”

Tejas Natural Gas Liquids LLC is responsible for processing andmarketing gas liquids from Shell’s Gulf of Mexico production. Thecompany ranks as the largest NGL producer in South Louisiana.Facilities operated by Enterprise at Mont Belvieu include one ofthe largest NGL fractionation and MTBE production facilities andthe largest butane isomerization complex in the United States andtwo propylene fractionation units.

The company also owns and operates a network of about 500 milesof pipeline throughout the Gulf Coast and a fractionation facilityin Petal, MS, with capacity of 7,000 barrels per day. Thepartnership leases and operates one of only two commercial NGLimport-export terminals on the Gulf Coast and NGL storage wellswith about 35 million barrels of capacity.

Last month Royal/Dutch Shell Group said it plans to sell 40% ofits chemicals business and take a related fourth quarter $4.5billion after-tax charge as part of a major restructuring. Otherassets to be sold include Transok, the 6,500-mile Oklahomaintrastate gas transmission and gathering system that Shellsubsidiary Tejas Gas bought in May 1996. Tejas paid $890 millionfor Transok, which makes it one of the largest midstreamtransactions ever completed. In a statement issued by Tejas lastmonth, the company said it would “immediately initiate acompetitive sales process, with an anticipated closing of thetransaction in the first half of 1999.”

Tejas said the sale is “consistent with the recognition that thelong-term success of our midstream business is dependent oncapturing the key synergies between Tejas, Coral and Shell’sproducing assets. We view our Gulf Coast transportation, storageand NGL operations as the assets best aligned to complement Coral’sindustrial marketing activities and the growth of our powergeneration business. The sale of Transok will enhance our capitalresources and our capability to concentrate on these synergies.”

Joe Fisher, Houston

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