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FTC Orders Shell/Tejas to Divest Gathering Lines

FTC Orders Shell/Tejas to Divest Gathering Lines

The Federal Trade Commission has issued a proposed consent order requiring Shell Oil subsidiaries Tejas Energy and Transok to divest 171 miles of the 690 miles of natural gas gathering lines recently acquired from Coastal Corp. subsidiaries in Oklahoma and the Texas Panhandle.

Shell, which completed the acquisition of the gas gathering assets from ANR Field Services and ANR Production Oct. 1, has agreed to sell the properties to settle the FTC's antitrust complaint, a spokesman said. While the company did not agree with the FTC's "narrow" reading of the competitive situation, "we agreed to the settlement to avoid further delay with the acquisition."

A proposed consent order issued Thursday by the FTC said Tejas/Transok proposed to acquire certain of ANR's gas gathering assets in western Oklahoma, the Oklahoma and Texas panhandles and southwestern Kansas, as well as a natural gas processing plant in Oklahoma.

The acquisition would substantially reduce competition for natural gas gathering services, increase gathering rates and result in an overall reduction in gas drilling and production in western Oklahoma and in the Texas panhandle, the FTC said. As initially proposed, the acquisition would substantially lessen gas gathering competition in portions of Roger Mills, Beckham, Custer, Washita, Caddo and Grady Counties in western Oklahoma and Wheeler County in the Texas Panhandle just west of the Oklahoma border. In those areas, without Commission action, gas producers would only be able to turn to Transok or, at most, one other gas gatherer for gas gathering services. It is unlikely that the competition eliminated by the proposed acquisition would be replaced by new entries into the gas gathering market in these areas, the FTC added. Transok is the largest gatherer and processor of gas in the six areas of concern to the FTC.

Under the order Shell and Tejas must sell certain parts of the ANR pipeline systems in those areas by January 5, 1999. (FTC File No. 9810166). The spokesman said Shell currently is negotiating with a number of parties and is interested in talking with any other potential buyers.

Ellen Beswick

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