TEPPCO to Buy Green River Basin Gathering Assets from AEC
Houston-based Texas Eastern Products Pipeline Co. LLC, general partner of TEPPCO Partners L.P., has signed an agreement for TEPPCO to acquire Jonah Gas Gathering Co. from Calgary-based Alberta Energy Co. (AEC) for approximately US $360 million.
Under the deal, TEPPCO will acquire about 300 miles of existing gathering lines, five compressor stations totaling 33,000 hp and related metering facilities in the Green River Basin located in southern Wyoming. In addition, 50 miles of new 20-inch diameter pipeline and compression are under construction, which will increase the gathering capacity of the assets to be acquired to more than 700 MMcf/d. The new facilities are scheduled to be in service in early 2002.
The transaction, which hinges on regulatory approvals, is expected to close by the end of this month. The Jonah Gas Gathering assets will be operated and commercially managed by Duke Energy Field Services LP (DEFS) under an agreement with TEPPCO. DEFS is the parent of Texas Eastern Products Pipeline.
"The acquisition of these recently built, high-quality assets signals TEPPCO's entry into the natural gas gathering business," said William L. Thacker, CEO of Texas Eastern Products. "We believe these are premier assets in one of the most prolific natural gas basins in the United States, and will provide TEPPCO with significant organic growth opportunities."
AEC, one of the largest independent oil and gas producers in North America, said a gain exceeding C$100 million is expected to be recorded on the sale, and will be used to reduce the company's bank debt. Moreover, "to assure competitive market access for our growing Wyoming production, we [will] retain long-term gas transportation agreements on the system. The sale will have no impact on AEC's gas operating or transportation costs," noted AEC President Gwyn Morgan.
TEPPCO, a publicly traded master limited partnership, owns and operates one of the largest common carrier pipelines of refined petroleum producers and liquefied petroleum gases in the nation; owns and operates natural gas liquid pipelines; is engaged in crude oil gathering, transportation, storage and marketing; and owns a 50% interest in Seaway Crude Pipeline Co. and an undivided ownership interest in the Rancho and Basin Pipelines.
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