Kinder Morgan Energy Partners LP has picked up a 32.5% stake inthe Cochin Pipeline System from NOVA Chemical Corp. The 1,900 mile,12-inch pipeline operates in the Canadian sedimentary basin betweenFort Saskatchewan, AL and Sarnia, ON, carrying high vapor pressureethane, ethylene, propane, butane and natural gas liquids to theMidwestern U.S. and eastern Canadian markets.

The Cochin Pipeline transverses three Canadian provinces andseven U.S. states, with an estimated system capacity of 112,000barrels a day. Formed in the late 1970s, the system is a jointventure of BP, Conoco, Shell and NOVA. NOVA, a commodity chemicalcompany, had recently increased its share in the pipeline when itpurchased assets from Dow Chemicals Canada Inc., but said at thetime that it did not intend the purchase to be long term. Themonetary details of the sale to KMI were not disclosed.

The purchase is still subject to rights of first refusal fromthe other Cochin Pipeline owners, but pending regulatory approval,the acquisition is expected to be immediately accretive to cashavailable for distribution to KMP shareholders. Based in Houston,KMP said the acquisition would give the company “a foothold in theimportant western Canadian sedimentary basin, which will play anintegral role relative to the future supply of natural gas and gasliquids in North America.” NOVA will continue to hold a 20%interest in the pipeline after the sale.

In this year alone, KMP has purchased more than $750 million inassets. Officials said “additional acquisitions” are scheduledbefore the end of the year.

“We’re excited to be acquiring a significant interest in theCochin Pipeline, which is a large, stable system with a solid trackrecord that fits into our core pipeline business,” said KMP CEORichard D. Kinder.

On Oct. 19, Kinder Morgan Inc. reported a 351% increase in itsthird quarter income from its continuing operations of $26.6million, or 23 cents per diluted common share, compared with $5.9million, or 23 cents per share in 1999. Net income for the thirdquarter was also $26.6 million, or 23 cents a share, compared to aloss of $14.5 million, or a loss of 20 cents a share a year ago.The loss included a $20.4 million after-tax loss from discontinuedoperations.

CEO Kinder said the company was “delighted” with the third quarterresults, and said that all of its “major business segments deliveredincreased earnings.” In the past year, its merger with KN Energy wasfinalized (see Daily GPI, Oct. 11, 1999;Aug. 30, 1999), and Kinder said KMI’s”back-to-basics strategy” had positioned the company for futuregrowth.

The KMI board declared a common stock dividend of 5 cents ashare payable Nov. 14 to shareholders of record on Oct. 31.

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