Union Pacific Fuels and three Wichita, KS-based affiliates ofKoch Industries exchanged certain gas and gas liquids assets inEast Texas and Southern Louisiana. The Koch companies will receivea portion of Union Pacific’s interest in the Panola Pipeline, whichruns from Carthage, TX, to Mont Belvieu, TX. In addition, the Kochcompanies will get Union Pacific’s interest in the Mont Belvieu Ifractionator as well as the Patterson and Calumet gas plants inSouthern Louisiana.

In exchange Union Pacific will receive certain Koch gatheringsystems in East Texas and Koch’s Longview and East Texas processingplants, which have combined capacity of 190 MMcf/d. Terms were notdisclosed, and closing is conditioned on regulatory approvals.

“This trade is part of our on-going efforts to better optimizeour natural gas operating assets and improve profitability,” saidJohn Gibson, president of Koch Midstream Gathering and Processing.”The addition of these assets positions us for continued growth inthe gas liquids business in the Texas Gulf Coast region and willboost our ability to add value to our customers.”

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

“With the addition of the Koch assets, UPFI will be able toreduce our cost structure and improve our service in East Texas,”said Don Niemiec, UPFI President. “UPFI will now process 970 MMcf/din East Texas and will gather approximately 530 MMcf/d. Thisexchange will allow us to compete for incremental volumes of gasthat we previously could not access with our existinginfrastructure.”

Joe Fisher, Houston

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