CMS, DEFS Swap Strategic Properties
In a strategic move said to benefit both midstream energy companies, CMS Field Services Inc. has swapped some of its natural gas assets in Oklahoma and Kansas for some of Duke Energy Field Services' similar assets onshore and offshore Louisiana.
DEFS' natural gas gathering and condensate measuring and transportation assets onshore and offshore Louisiana were exchanged with CMS Field Services' assets in Oklahoma and Kansas, giving each company more proximity to their other assets. The deal closed Dec. 20 and was announced Friday. No financial details were disclosed.
"This transaction makes both strategic and economic sense for CMS Energy," said Tim Young, senior vice president of the field services division. In 1999, CMS Energy acquired Duke Energy's Panhandle Eastern Pipe Line Co. and Trunkline Gas Co., and Young said the swap gives CMS more opportunities to offer enhanced services to "existing and potential shippers" on CMS-owned properties along the Gulf Coast.
In the deal, CMS obtained 10 offshore gas gathering laterals, a one-third ownership in the Atchafalaya Pipeline System and complete ownership in a Patterson, LA condensate measuring facility. The 10 offshore gas gathering laterals are connected to two offshore pipelines owned by CMS Energy: the Trunkline Gas Co.'s Terrebonne system and the Sea Robin Pipeline Co. The 39-mile-long Atchafalaya Pipeline receives condensate from the Terrebonne system, while the Patterson measurement facility measures condensate transported through the Atchafalaya pipe.
In return, Denver-based DEFS, a subsidiary of Duke Energy and Phillips Petroleum, obtained two Midcontinent natural gas gathering systems: the Bradshaw system in Kansas and the Roaring Creek system in Oklahoma. DEFS also will pick up the Miles Hampton and Ulysses systems in Kansas and the Christmas Lateral in South Texas.
"These assets are a great strategic fit with our assets in the area, as they will specifically supply to plants with existing capacity," said Michael Bradley, senior vice president, DEFS' northern division. Bradley said the asset exchange supported the company's growth strategy "optimizing and rationalizing assets" and giving the company more flexibility.
CMS Field Services supplies regions of Louisiana, the Texas Gulf Coast, West Texas, Central Texas, the Midcontinent and the Rocky Mountains, and owns approximately 5,000 miles of gathering pipeline. DEFS, 70% owned by Duke and 30% by Phillips, operates in 11 states and across five of the largest natural gas producing regions in North America. It owns and operates 71 plants and 57,000 miles of pipe, with operating territory extending from western Canada to the Gulf Coast.
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