In an effort to increase their access to deepwater gas, TheCoastal Corp. announced yesterday that subsidiaries of ANR Pipelinehave entered in a series of agreements under which theycollectively have become joint owners in a new holding company,Deepwater Holdings L.L.C. The financial terms were not disclosed.

The newly formed Deepwater Holdings will own a number ofpipeline, dehydration and processing assets in the Gulf of Mexico,including the High Island Offshore System (HIOS), the U-T OffshoreSystem (UTOS), East Breaks Gathering Co., Stingray Pipeline Co.L.L.C. and West Cameron Dehydration Co. L.L.C. The company will bejointly owned by the unspecified ANR subsidiaries and Leviathan GasPipeline Partners L.P., of which El Paso Field Services is themajority partner.

In order to become an equal partner in the new company, the ANRsubsidiaries purchased KN Energy’s 50% stakes in Stingray Pipelineand West Cameron Dehydration for $24 million in cash. The saleclosed Sept. 30. They also increased their ownership interests inHIOS, UTOS and East Breaks Gathering to 50% each, buying theadditional stakes from Leviathan, said ANR spokesman Joe Martucci.Previously, the subsidiaries had owned 40% of HIOS, one-third ofUTOS and 40% of East Breaks Gathering, he noted.

“This transaction will widen ANR’s reach to access additionalgas reserves and position us for future growth as deep-waterreserves are developed,” said Jeffrey A. Connelly, president andCEO of ANR Pipeline.

KN’s sale of its interests in Stingray and West CameronDehydration, combined with thedivestitures of its interests inthe HIOS and UTOS offshore systems for $51 million last June,completes “for the most part” KN Energy’s exodus from the Gulf ofMexico, said spokesman Larry Pierce.

The sale of the two offshore assets is part of KN Energy’s”previously announced strategy to restore profitability, increasefocus on core operations and deleverage our balance sheet,” saidinterim KN Chairman and CEO Stewart Bliss.

It also was seen as a house-cleaning measure readying KN Energyfor its merger with Kinder Morgan, which is to be voted on by theCalifornia Public Utilities Commission on Thursday. If Californiaregulators approve the deal then, Pierce said the merger could becompleted “as early as” Friday.

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