Union Pacific, Koch Swapping Assets

Union Pacific Fuels and three Wichita, KS-based affiliates of Koch Industries exchanged certain gas and gas liquids assets in East Texas and Southern Louisiana. The Koch companies will receive a portion of Union Pacific's interest in the Panola Pipeline, which runs from Carthage, TX, to Mont Belvieu, TX. In addition, the Koch companies will get Union Pacific's interest in the Mont Belvieu I fractionator as well as the Patterson and Calumet gas plants in Southern Louisiana.

In exchange Union Pacific will receive certain Koch gathering systems in East Texas and Koch's Longview and East Texas processing plants, which have combined capacity of 190 MMcf/d. Terms were not disclosed, and closing is conditioned on regulatory approvals.

"This trade is part of our on-going efforts to better optimize our natural gas operating assets and improve profitability," said John Gibson, president of Koch Midstream Gathering and Processing. "The addition of these assets positions us for continued growth in the gas liquids business in the Texas Gulf Coast region and will boost our ability to add value to our customers."

Union Pacific spokesman Pat Doyle said the agreement with Koch did not allow him to comment on terms of the deal.

"With the addition of the Koch assets, UPFI will be able to reduce our cost structure and improve our service in East Texas," said Don Niemiec, UPFI President. "UPFI will now process 970 MMcf/d in East Texas and will gather approximately 530 MMcf/d. This exchange will allow us to compete for incremental volumes of gas that we previously could not access with our existing infrastructure."

Joe Fisher, Houston

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