Houston-based Anadarko Petroleum Corp. increased its presence inthe East Texas Bossier sand gas play yesterday, spending $38million to acquire Pinnacle Gas Treating Inc., which owns andoperates a natural gas pipeline and treating plant there. Pinnacleis a subsidiary of Western Gas Resources Inc. based in Denver, andit plans to use the sale to pay down debt.

Anadarko, which recently said it would boost its capitalspending this year about 56%, already runs 33 drilling rigs in theBossier, making it the single most actively drilled play in NorthAmerica. It will continue to operate its new assets under thePinnacle name and retain Pinnacle’s 16 employees. Before theacquisition, Anadarko was already shipping approximately 275 MMcf/dthrough the Pinnacle pipeline and the Bethel plant.

“This acquisition will give us increased flexibility in how weship and market our Bossier gas, as well as improve the service wecan offer to other shippers,” said John N. Seitz, Anadarko COO.”The Pinnacle pipeline tracks the Bossier trend through four EastTexas counties. As gas volumes in the area continue to grow, we’llbe able to expand the system right along with it.”

Pinnacle’s pipeline runs from the Texas counties of Franklin toBethel, and then through portions of Freestone, Anderson, Leon andRobertson counties. It has 60 miles of large-diameter pipe, 40miles of small-diameter laterals and spurs, and a 60-mile fuelre-delivery system. Currently, the pipe can carry as much as 500MMcf/d.

The Bethel treating plant removes carbon dioxide and hydrogensulfide from the gas and has a current capacity of nearly 300MMcf/d. Anadarko said it would expand the plant capacity to meetthe demands from growing activity levels and volumes in the area.

Anadarko has been targeting more North American acquisitions sincemid-2000, when it boosted its annual budget for 2000 by 34% (see DailyGPI, Aug. 1, 2000). It said then thatprincipal acquisition targets included Anadarko’s natural gas projectsin East Texas and Louisiana, its gas assets in western Canada and gasand oil projects on its shelf, sub-salt and deep-water properties inthe Gulf of Mexico.

With the sale, effective Jan. 1, Western said it will post afirst quarter after-tax gain of $7 million, or 22 cents a share.

“This sale largely completes our planned divestiture ofunder-performing assets begun two years ago, and allows us toreinvest the proceeds into higher growth activities such as thePowder River coalbed methane development,” said Lanny Outlaw,Western’s CEO. Western, one of the largest producers of coalbedmethane in the Powder River Basin, has nearly 531,000 net acresthere under lease. (See related story).

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