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Texaco, Enron Join Forces in Louisiana

Texaco, Enron Join Forces in Louisiana

In a move that brings together two of the energy industry's 800-pound gorillas, Texaco and Enron North America announced last week they are combining their Louisiana pipeline and storage assets in a new joint venture called Bridgeline Holdings LP.

The venture will have a staff of about 85 employees who will operate the Bridgeline and Louisiana Resources intrastate pipelines (including the Henry Hub), the Napoleonville and Sorrento salt dome storage facilities and a marketing division with about 1 Bcf/d of gas sales. It will begin operations March 1.

"The formation of this joint venture reflects a continuation of Texaco's long-term commitment to the industrial and utility markets of south Louisiana," said Terry F. Hudgens, president of Texaco Natural Gas Inc. "As the leading marketer of natural gas and natural gas services in this area, Texaco is excited about combining the strengths of Bridgeline and Louisiana Resources Company to enhance the products and services we offer to customers in this increasingly competitive market."

Cliff Baxter, chairman and CEO of Enron North America, said the new company would have greater overall system flexibility that will improve operating efficiencies. "By combining Enron's trading, risk management and financial expertise with Texaco's marketing franchise, we will be able to expand our strategic position and optimize the gas supply for customers," he said.

Bridgeline Holdings, to be headquartered in Houston, will have combined facilities consisting of more than 1,000 miles of transmission and distribution pipeline, 7 Bcf of salt dome storage capacity, with an additional 6 Bcf in development, and 33,050 horsepower of compression. The combined system will have a diversified gas supply, high and low pressure operating capabilities and access to the interstate pipeline grid in south Louisiana and the Henry Hub.

"When you combine the two systems' footprint, the number of receipt points that we have now versus what we had independently [provides] a lot more system flexibility and capability," said Randy Curry, president of the new joint venture and a former senior vice president for Texaco Natural Gas in the pipeline and plants division. Combined the company will have connections with 65 pipelines and 76 major industrial plants.

"It's supply interconnectivity. We have a much broader supply base that we access now. We have a lot more system flexibility because the LRC pipeline system was operated as a high-pressure system - it could physically redeliver back into the interstate grid at all of the points of interconnection. Bridgeline's system operated more as a lower pressure gas distribution system, receiving gas from the interstate grid but not able to physically redeliver gas back off its system - the only way it could accomplish that was by displacement."

The companies' two salt cavern storage facilities, Texaco's 3.6 Bcf Sorrento facility and Enron's 4.2 Bcf Napoleonville field, currently are being expanded to provide greater deliverability and storage capacity. Napoleonville will be a 7 Bcf working gas cavern when the expansion is complete with 600 MMcf/d of deliverability, while Sorrento will be a 6 Bcf working gas cavern with 600 MMcf/d of deliverability. Combined the company will operate 13 Bcf of working storage capacity and 1,200 MMcf/d of deliverability.

"The business strategy really doesn't change at all with respect to this marketplace," said Curry. "Both companies before had been focused on selling in the industrial corridor. That's what this really is designed to do. This just puts a business combination out there that just has a lot more capability to serve that corridor. It's a heavily industrialized area... It's a very competitive market, one in which most industrial sites along the corridor there have multiple connections to other pipelines."

Rocco Canonica

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