Enterprise Products Partners LP (EPD) agreed to pay M2 Midstream LLC $1.2 billion to buy two natural gas gathering and treating systems that run through the Haynesville/Bossier shales, as well as the Cotton Valley and Taylor sands formations in Louisiana and East Texas.

The purchase “accelerates our entry into the Haynesville-Bossier Shale play and substantially increases our footprint in the area,” said EPD CEO Michael Creel. “This purchase offers producers on the State Line system an alternative to the takeaway pipelines going to Perryville [the Louisiana hub] as a result of our planned connection to the Haynesville Extension, which provides producers with an outlet to markets in South Louisiana and interstate pipelines that serve natural gas markets in the southeast United States.”

State Line, which began operations last year, crosses the DeSoto and Caddo parishes of Louisiana, as well as Panola County, TX. The system has 138 miles of gas pipelines, two treating facilities and capacity of about 400 MMcf/d. State Line now gathers around 260 MMcf/d but could nearly triple its capacity to 700 MMcf/d after a 50-mile expansion of the system is completed in June, EPD stated.

State Line would interconnect with the 42-inch diameter Haynesville Extension of EPD’s Acadian gas pipeline (see Daily GPI, Nov. 18, 2009). The Haynesville Extension is expected to be completed in the second half of 2011. Once connected to the extension, State Line could be expanded to 1.2 Bcf/d “at a nominal cost,” EPD said.

The 249-mile-long Fairplay gas system, with capacity of about 285 MMcf/d, traverses the East Texas counties of Rusk, Panola, Gregg and Nacogdoches. About 62 miles of the system are leased from third parties. The system now gathers around 180 MMcf/d. It is expected to be connected to the Enterprise Texas Pipeline system by early 2011.

The transaction is to be closed in early May and would be accretive to EPD’s distributable cash flow in the second half of this year, company officials said.

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