Koch Midstream Gathering and Processing and Duke Energy FieldServices signed a letter of intent to exchange gas gathering andprocessing systems in Texas, Mississippi, New Mexico, Alabama andOklahoma.

Duke will acquire Koch’s gathering and processing systems inSouth Texas and Oklahoma that Koch purchased in November 1997 fromDelhi. Koch will acquire Duke’s Black Warrior system in Alabama,the AIM Pipeline in Mississippi and certain gathering andprocessing assets in West Texas and New Mexico. The agreement issubject to certain contingencies; terms were not disclosed. Theexchange is expected to take place in the third quarter.

The swap fits Koch’s plan to maintain a strong presence in thegas gathering, processing, transportation and storage businesses.”As we expand those activities and grow our trading and customerservices, we will continue to focus on growth, profitability andoperational excellence. Our business will be better able to offersuperior value for gas producers and consumers by providing moreefficient field and financial services,” said John W. Gibson,president of Koch Midstream Gathering and Processing. Both partiesalso will enhance abilities to provide risk management, operatingand financial services.

As the deal has not been finalized, Duke spokesman John Barnettsaid he could not provide any details of the company’s plans forthe assets it is about to acquire. He said the deal should closearound Sept. 1. “It would be premature to talk about what our planswould be. I can tell you that they fit in very well with ourexisting assets. We’ve got assets mainly in South Texas andOklahoma, and that’s exactly where these assets are located. Koch,on the other hand, most of their assets are in Mississippi andAlabama, which is where most of the assets from us are located.”

Duke’s Field Services division has been fairly active this year,announcing a number of asset deals. Monday the company announcedacquisition of Dynegy’s 56% interest in the 85 MMcf/d Roberts Ranchgas processing plant in Midland County, TX (See Daily GPI, July 28,1998). Field Services recently completed expansion of twoprocessing plants in North Louisiana and Southeast Texas.Expansions added 100 MMcf/d of capacity at the Minden, LA, plantand 75 MMcf/d at the processing complex in Port Arthur, TX, andincreased capacity of the two Gulf Coast plants from 240 MMcf/d to415 MMcf/d.

Field Services recently acquired the Hico-Knowles plant inLincoln Parish, LA, from Sid Richardson Corp. This plant will beintegrated into Duke Energy Field Services’ existing Rustongathering system to offer producers a competitive processingalternative in Lincoln Parish.

The company acquired the 85 MMcf/d capacity Haynesville, LA.,processing and fractionation facility and related gas and gasliquids pipeline systems from Dynegy Midstream Services April 20.And in early April, Duke Energy Field Services began deliveriesinto the Perryville Hub in northern Louisiana through a new4.5-mile gas pipeline and the addition of 7,500 hp of mainlinecompression. The expansion enabled Duke Energy to provide anincremental 100 MMcf/d of delivery capacity into the majorpipelines serving the Midwest and Northeast markets. The companyalso expanded its South Texas gathering and processing capabilitieswith the acquisition of the 90-mile Brooks-Hidalgo Pipeline gasgathering system.

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