NGI The Weekly Gas Market Report
Houston’s Enterprise Products Partners L.P. has purchased Acadian Gas LLC’s extensive southern Louisiana assets, which include 1,000-plus miles of pipeline, more than 1 Bcf/d of capacity and a leased natural gas storage facility with 3.4 Bcf of capacity from Coral Energy LLC for $226 million in cash. Coral Energy, also based in Houston, is an affiliate of Shell Oil Co.
Acadian’s assets include the Acadian, Cypress and Evangeline natural gas pipeline systems, linking natural gas from onshore developments and offshore pipelines, continental shelf and deepwater production to local gas distribution companies, electric generation and industrial customers in the Baton Rouge-New Orleans-Mississippi River corridor.
The systems have interconnections with 12 interstate pipelines and four intrastate pipelines as well as a bi-directional interconnect with Henry Hub. The leased natural gas storage facility is located in Napoleonville, LA.
“Acadian is a major and strategic investment for Enterprise,” said O.S. “Dub” Andras, Enterprise CEO. “Acadian is one of the best natural gas pipeline assets in Louisiana and has long-standing relationships with high quality customers.” The system, he said, was complementary to Enterprise’s NGL asset base with “excellent prospects” for growth, and was well positioned to benefit from expected increased natural gas production.
The acquisition is expected to expand Enterprise’s platform of fee-based, midstream energy services to include natural gas transportation and storage. “We believe there will be many growth and investment opportunities in natural gas and NGL infrastructure as producers respond to increasing demands for natural gas to fuel power generation.” Andras said the transaction would be immediately accretive to earnings and cash flow, and said it is expected to close in the fourth quarter.
Enterprise’s integrated operations are geographically focused on the Gulf Coast, which accounts for about 55% of domestic NGL production and 75% of U.S. NGL demand. It ranks as the second largest publicly traded partnership, with a value of nearly $2.6 billion, and has made more than $750 million in new investments since it was founded in 1968.
Last year, Enterprise completed a $275 million acquisition of Tejas Natural Gas Liquids LLC, Shell’s Louisiana and Mississippi NGL business, and entered into a 20-year natural gas processing agreement with Shell to process its current and future Gulf of Mexico production (see NGI, Sept. 27, 1999). Enterprise’s strategic venture partners include Shell, Exxon Mobil, BP Amoco, Texaco, Williams, Sun Oil and Duke Energy.
Carolyn Davis, Houston
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