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Duke Climbs to Top NGL Spot with UPFuels Deal

Duke Climbs to Top NGL Spot with UPFuels Deal

Duke Energy Field Services became the top NGL producer in the country and the second largest gas marketer with completion of its purchase of UPFuels, and Union Pacific Resources' marketing operations for $1.35 billion.

Duke's processing capacity now stands at 6.9 Bcf/d. Liquids production is up to 200,000 b/d, and gas marketing is about 11 Bcf/d based on 1998 sales volumes. Its purchase of NP Energy in December added another 1 Bcf/d of gas sales and could propel Duke to the No. 1 marketing spot, replacing Enron. Additionally, 8,000 miles of gas pipeline are being added through the UPR deal giving Duke a total of 28,000 miles of gas lines.

"The completion of this purchase positions Duke Energy Field Services as one of the top participants in the midstream gas industry," said Jim Mogg, CEO of Duke Energy Field Services. "Also effective April 1, Duke Energy Field Services plans to complete the purchase of Koch's gathering, treating and processing assets in South Texas; will finalize [construction of] the new 200 MMcf/d cryogenic Wilcox plant in South Texas; and mark the beginning of the first full month of operations for the Mobile Bay Processing Plant, of which the company is the operating partner."

Under the agreement, much of UPR's U.S. production will be gathered and processed by Duke for a minimum of 10 years. UPR also will dedicate for five years most of its natural gas and NGL production to Duke Energy for marketing.

For UPR, the deal marks an important step toward strengthening its balance sheet and hitting debt reduction targets, said UPR Chairman Jack Messman. "Our deal with Duke Energy was the largest element in our announced program to reduce debt by $2 billion by the end of this year."

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