El Paso Energy Partners LP, formerly Leviathan Gas PipelinePartners LP, said it has entered into a letter of intent with asubsidiary of El Paso Energy Corp. to buy El Paso Intrastate -Alabama Inc. (EPIA) for $24.5 million in cash. EPIA owns andoperates 450 miles of gathering and transmission pipelines andrelated compression facilities in the Black Warrior Basin inwestern Alabama.

The system gathers both coal seam and conventional natural gassupplies for redelivery to Southern Natural Gas, Tennessee GasPipeline, regional local distribution companies, andmunicipalities. Current throughput is 150 MMcf/d.

“The EPIA acquisition is a first step in executing our newstrategy to expand the scope of the partnership’s midstreamactivities,” said Robert G. Phillips, CEO of El Paso EnergyPartners. “EPIA is a fee-based system attached to long-livedreserves in an area where interest in coal seam production isincreasing due to low finding costs. We believe the system haslong-term growth potential through aggressive supply development,consolidation of other gathering systems in the area, and moreefficient management. We expect the acquisition to be immediatelyaccretive to El Paso Energy Partners’ income and cash flow.”

James Lytal, president of El Paso Energy Partners, said whilethe company remains committed to aggressive growth in thedeep-water Gulf of Mexico, the acquisition of onshore midstreamenergy assets complements offshore activities by “improving cashflow growth and diversifying our portfolio. This transaction, withits predictable, long-term cash flow characteristics, fits thepartnership’s investment profile and illustrates the opportunitiesavailable in the market to enhance cash flows and unitholderreturns.”

The transaction is expected to close during the first quarter.Upon completion, El Paso Field Services will operate the system onbehalf of El Paso Energy Partners. El Paso Energy Partners LP is apublicly owned master limited partnership that serves as one of ElPaso Energy Corp.’s primary vehicles for the acquisition anddevelopment of midstream energy infrastructure assets both onshoreand offshore.

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