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Midcoast Buying Koch Pipes in Texas, Louisiana

December 28, 1998
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Midcoast Buying Koch Pipes in Texas, Louisiana

Midcoast Energy Resources has agreed to buy the Gloria pipeline system in southeastern Louisiana and the Bruni gathering system in South Texas for nearly $7.53 million from Koch Gateway Pipeline.

The Gloria system is about 133 miles of mainly 12- and 16-inch pipeline with a 1,650 hp compressor station, and includes 51 miles of gathering pipeline and 82 miles of transmission pipeline in St. Bernard, Plaquemines, Jefferson and Lafourche parishes, LA. The system gathers gas from seven producing fields and directly supplies gas to an industrial customer and a local distribution company in the area. The daily throughput on the system averages 23,250 Mcf/d.

The Bruni system, in Duval, Jim Wells, Live Oak and San Patricio counties, TX, is composed of 142 miles of mainly 14- and 18-inch pipeline. The system gathers gas from producing wells in the region and provides gas supply to the local distribution company for the cities of Mathis, Orange Grove, Agua Dulce and San Diego, TX.

Both pipelines are presently part of Koch's interstate system and FERC must approve the systems' abandonment from interstate service and sale. Midcoast intends to operate both pipelines as separate intrastate systems.

"The Gloria system further establishes Midcoast in Louisiana where we have built a strong operating base including the mid-Louisiana systems we purchased last year and the Creole system we purchased earlier this year," said Dan Tutcher, Midcoast president. "The Bruni system will further solidify Midcoast's presence in south Texas and serve to complement our existing asset base there, which already includes 15 systems with over 145 miles of gathering and end-user pipeline."

In October 1997, Midcoast acquired Republic Gas Partners LLC, owner of the Mid Louisiana Gas Co. (MIDLA), Mid Louisiana Gas Transportation Co., and Mid Louisiana Marketing Co. MIDLA owns a 386-mile, 22-inch interstate pipeline running from a gas field in Monroe, LA, south through Mississippi to Baton Rouge, LA. The system includes two compressor stations and has throughput capacity of 200 MMcf/d. MIDLA serves Entergy Gulf States, the LDC for Baton Rouge; Mississippi Valley Gas Co., the LDC for Natchez, MS; International Paper's facility near Natchez; and Exxon's Baton Rouge Complex.

In July, Midcoast's Mid Louisiana Gas Transmission Co. subsidiary bought the Creole Pipeline Corp. from El Paso Energy Corp. Creole owns and operates a 44-mile pipeline near New Orleans, which has capacity of 115 MMcf/d and an average throughput of 50 MMcf/d serving several large industrial customers, including Entergy Louisiana, Domino Sugar, and Mobil's Chalmette refinery.

Duane Herbst, Midcoast vice president of corporate affairs, said the company will be integrating its most recent acquisition with existing assets.

Joe Fisher, Houston

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