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Exxon Buys SoCalGas Processing, Offshore Facilities

Exxon Buys SoCalGas Processing, Offshore Facilities

Exxon Company U.S.A. will buy a coastal processing facility 25 miles west of Santa Barbara from a Southern California Gas affiliate for an undisclosed amount, it was announced last week. The plant processes 60 MMcf/d of offshore California natural gas produced by Exxon's Platform Honda.

The deal involves Exxon buying the stock of Pacific Offshore Pipeline Company (POPCO), an affiliate of SoCalGas under the Sempra Energy corporate umbrella, within the next 60 to 90 days. SoCalGas would continue to be the buyer for the plant's output under long-term contracts it has had in place for the last 15 years, except for revisions made in 1994.

Exxon decided to exercise an option it obtained in 1994 to buy the gas processing facility as part of SoCalGas's global settlement with its major suppliers and shippers as a means of attempting to help make its transportation more competitive in the face of increased competition from two new interstate pipelines entering the California market in the early 1990s. Exxon had a five-year option to buy that would have expired at the end of this year.

Included in the purchase is an eight-mile pipeline from the offshore gas production platform in the Santa Barbara Channel to the onshore processing plant that cleans the gas for transmission and distribution among SoCalGas's other supplies that range between 2 and 3 Bcf/d.

The processing plants currently employees 51 people, all of whom are slated to be laid off when the deal is finalized, although some of them may be offered jobs with Exxon when it takes over or in othere parts of the Sempra Energy companies.

Sempra Energy officials said it has transition plans in place with Exxon to ensure the continued "safe operation of the plant and compliance with all government regulations."

Exxon had been reviewing the POPCO plant operations and financial data throughout 1998 before making its purchase decision, "so this exercise of the purchase option does not come as a complete surprise," said Mike Walker, POPCO's president. "However, Sempra Energy Resources would gladly have continued ownership of this efficient and profitable business."

Richard Nemec, Los Angeles

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