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Midcoast Continues Texas Gathering System Expansion

Midcoast Continues Texas Gathering System Expansion

Midcoast Energy Resources last week piled more assets onto its growing Texas-Louisiana pipeline empire with two separate deals worth a combined $4.55 million.

Midcoast bought the Mendota gathering pipeline and processing plant from Seagull Energy Corp. for $3.75 million in cash. The Mendota facilities are in Roberts County, TX, and include about 35 miles of gathering pipeline, a 10 MMcf/d cryogenic gas processing plant, which Midcoast said it will shut down, and compression facilities with a combined 2,400 hp. The system gathers gas from more than 70 active wells and has a total throughput of 7,200 Mcf/d. The Mendota pipeline is located adjacent to the Anadarko system, which Midcoast purchased from El Paso Energy in September 1998, and Midcoast plans to integrate the operations of the Mendota and Anadarko systems. Also as part of the transaction, Seagull has dedicated production from all of its existing acreage in the area to Midcoast for the next five years.

In a separate deal, Midcoast bought the Tynan system from Texas Southeastern Gas Gathering Co. for $0.8 million in cash. The Tynan facilities consist of about 24.5 miles of gathering pipeline in Bee and Live Oak Counties, TX. The pipeline has a current throughput of 4,000 Mcf/day and is interconnected with the Bruni gathering system, which Midcoast said earlier this month it would acquire from Koch Gateway Pipeline.

"Both these acquisitions are strong complements to other pipelines which we recently purchased and illustrate our strategy to continue improving the assets which we acquire through further expansion and operational improvements," said Midcoast President Dan Tutcher. "The Mendota acquisition will immediately result in increased volumes at our Hobart processing facility, and we foresee further operational cost savings with the integration of the Mendota and Anadarko systems. The Tynan pipeline is a natural fit with the Bruni system and gives us control of additional upstream supplies for Bruni.

In July Midcoast announced plans to buy the sprawling Anadarko pipeline system from El Paso Field Services for $35 million (see NGI Aug. 3, 1998). The Anadarko system, which stretches through Beckham and Roger Mills counties, OK, and Hemphill, Roberts and Wheeler counties, TX, is made up of more than 696 miles of primarily 16-inch and 20-inch pipeline with an average throughput of 151 MMcf/d and a total capacity of 345 MMcf/d. It gathers gas from about 250 wells and includes a 40 MMcf/d gas processing facility, 11 compressor stations with a total of more than 14,000 hp and interconnections with eight major interstate and intrastate pipeline systems.

Also in July, Midcoast subsidiary Mid Louisiana Gas Transmission said it bought all of the stock in the Creole Gas Pipeline in southern Louisiana from El Paso Energy for an undisclosed amount (see NGI, July 6, 1998). The purchase of the 44-mile pipeline, which has a capacity of 115 MMcf/d and an average throughput of 50 MMcf/d, was part of Midcoast's efforts to increase its presence in the Louisiana transportation market. The pipeline, which is near New Orleans, will serve several large industrial customers, including Entergy Louisiana Inc., Air Products &Chemicals, Murphy Oil, Domino Sugar and Mobil Oil's Chalmette refinery.

And last May, Midcoast announced plans to buy two short pipeline systems from Koch Gateway to serve new demand for marketing and transportation in the Baton Rouge, LA, area (See NGI, May 18, 1998). The systems were acquired by Midcoast's wholly owned subsidiaries, Mid Louisiana Gas (MLG) and Mid Louisiana Gas Transmission (MLGT) for $2.6 million cash. Midcoast assumed operations June 1. The systems are about 10 miles of six- to 12-inch pipeline near Baton Rouge, LA, and were acquired as part of Midcoast's development of a high-pressure pipeline to serve new and existing customers in and around Baton Rouge. The expansion also was aimed at meeting demand from new contracts to provide 65 MMcf/d of marketing services and 20 MMcf/d of transportation services to an industrial facility near Port Hudson, LA, and a new cogeneration facility near Baton Rouge.

Joe Fisher, Houston

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