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Natural Proposes Sale Of One-Third of Gulf Assets

Natural Proposes Sale Of One-Third of Gulf Assets

Natural Gas Pipeline Company of America (NGPL) is seeking a green light to sell off 110 miles of offshore supply laterals and certain abandoned, retired facilities in the Gulf of Mexico to Green Canyon Pipe Line Co. LLC for an estimated $1.3 million.

The transaction, if approved by FERC, would reduce Natural's remaining offshore lateral holdings by one third. This would be in addition to the one third that it sold previously, according to the Kinder Morgan pipeline.

Since Order 636, "Natural has been in the process of shedding many of its [offshore] gas supply facilities.....Because of the large number of gas supply facilities which Natural owns, this has been a lengthy and on-going process," it told the Commission.

With the sale, Green Canyon --- which is owned by El Paso Energy Partners L.P. (EEP) --- will be able to significantly expand its gathering system in the Gulf. Its existing system is comprised of 66 miles of 10- to 20-inch diameter pipe.

Not only will Green Canyon acquire 110 miles of lateral pipeline from Natural, but it also will pick up about 71 miles of "previously abandoned, retired-in-place pipe," which Natural said would help both EEP and Green Canyon "advance their goals." Upon the sale and transfer of the facilities to Green Canyon, Natural has requested that they be considered non-jurisdictional gathering.While the facilities are important to Green Canyon, they are "no longer of strategic benefit" to Natural, according to the pipeline. "Production from the wells interconnecting these facilities has declined over the years along with related transportation revenues.....Only seven of the twenty-six laterals to be abandoned herein have flowed gas within the last year."

The lateral facilities are located in East Cameron, West Cameron, Eugene Island, South Marsh Island, the Vermilion areas offshore Louisiana and the High Island area offshore Texas. Most of the laterals are interconnected with the High Island Offshore System, U-T Offshore System and Pelican Interstate Gas System. Natural said its expects to file another application to abandon its lateral facilities that are connected to Stingray Pipeline.

Natural said no firm transportation contracts would be affected by the sale of the laterals. All customers served by the facilities receive interruptible service. Green Canyon has vowed to continue serving the current IT customers of Natural at "mutually acceptable rates, terms and conditions of service," according to the pipeline.

Susan Parker

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