Oneok Buys Kinder Morgan Midcontinent Assets
Oneok Inc. closed on the acquisition of a wide range of
Midcontinent gas assets from Kinder Morgan Inc. (KMI) last
Wednesday after FERC ruled that the operations included in the sale
were exempt from the terms of a recent consent agreement, which
imposed a number of restrictions on KMI companies for affiliate
violations [IN00-1]. This transaction, together with Oneok's
purchase of midstream assets from Dynegy Inc. last month, makes the
company one of the biggest players in the Midcontinent gas market.
As part of the transaction, Oneok purchased Westar Transmission,
Caprock Pipeline and American Gas Storage L.P., as well as all of
KMI's marketing and trading business (including KN Marketing) and
all of its gas gathering and processing facilities in West Texas,
Oklahoma and Kansas.
Oneok reported it paid KMI $108 million for the assets, plus
adjustments in working capital to cover natural gas and gas
liquids' inventories. It said an additional $6 million will be paid
for KMI's Buffalo Wallow interstate pipeline facilities upon FERC
approval of the sale. The Buffalo Wallow line stretches from
Oklahoma to the Texas Panhandle.
Also as part of the deal, the diversified energy company assumed
the operating lease associated with the Bushton, KS, processing
plant. In acquiring KMI's marketing business, it also became the
holder of a significant amount of long-term firm capacity on
Natural Gas Pipeline Co. of America (NGPL) and Kinder Morgan
Interstate Gas Transmission (formerly KN Interstate Gas
The holder of the capacity will be Oneok Gas Marketing, whose
name will soon be changed to Oneok Energy Marketing and Trade.
Lamar Miller, Oneok's vice president of risk control, declined to
disclose the specific amounts that Oneok will control on the two
Kinder Morgan pipelines. He said that while Oneok has contracted
for capacity on the lines previously, this marks the first time it
has held "long-term positions.....of any consequence."
About 350 employees, mostly in Kansas and West Texas, will be
added to the Oneok workforce.
The deal covers more than 12,000 miles of pipeline, six gas
processing plants with 1.26 Bcf/d of capacity and storage capacity
of 10.5 Bcf. "We will focus on combining these assets with our
existing assets and those added with the Dynegy transaction" in
March, said Oneok President David Kyle. Last month, Oneok acquired
Midcontinent gathering, processing and pipeline facilities from
Houston-based Dynegy for $307.7 million.
©Copyright 2000 Intelligence Press, Inc. All rights
reserved. The preceding news report may not be republished or
redistributed in whole or in part without prior written consent of
Intelligence Press, Inc.