Dallas-based Energy Transfer Co., which is in the process of expanding its Texas gas pipeline system, and TXU Fuel Co. have agreed to jointly market natural gas gathering and transportation services to producers in East Texas for redelivery to markets at the Katy Hub, near Houston. The agreement includes firm pipeline capacity for up to 150 MMcf/d with expansion capability up to 250 MMcf/d.

TXU Fuel Co. owns and operates 1,900 miles of pipelines that serve natural gas-fired power plants throughout Texas. Energy Transfer’s existing assets include 4,500 miles of natural gas gathering and transmission pipelines with an aggregate throughput capacity of 2.5 Bcf/d and natural gas treating and processing assets located in Texas, Oklahoma and Louisiana. Many of the assets the company currently owns were purchased from Aquila in October 2002, including the Oasis pipeline. It also owns the South Texas Austin Chalk gathering and treating system that covers several counties north of Houston.

The joint use of the TXU and Energy Transfer systems will lead to an increased ability to move natural gas to the Katy market as well as to provide access to producers in the Bossier Sand area in East Texas. The transaction will also improve TXU Fuel’s ability to transport natural gas from Katy to the Bethel area where it has extensive storage facilities.

“This agreement creates incremental marketable capacity on TXU’s East Texas system,” said Peter Greenberg, TXU Energy vice president. “Energy Transfer’s natural gas gathering system complements the TXU Fuel Co.’s pipeline system and provides us with improved access to producers and large business market customers.”

Mackie McCrea, senior vice president, Energy Transfer, said the agreement will take advantage of the new pipeline Energy Transfer is constructing to provide greater access out of the East Texas area to gas markets accessible at the Katy Hub. Energy Transfer recently announced its plans to extend its 30-inch Katy pipeline 70 miles north into the heart of the East Texas production area (see NGI, June 9). Producer XTO Energy Inc. has signed a nine-year agreement to transport 200 MMcf/d of its East Texas gas production on the new pipeline starting next year. Energy Transfer is currently in discussions with other East Texas gas producers in the Fort Worth Basin area to bring additional gas to the new 650 MMcf/d pipeline, which is expandable to 1 Bcf/d.

This capacity marketing agreement with TXU Fuel Co. supports an expansion of the Energy Transfer system even farther north to a central point on the TXU Fuel Co. line. The proposed Energy Transfer trunkline will extend from Limestone and Freestone County to the Katy Hub and is expected to begin operations in mid-2004.

For information on transportation services contact Chuck Higdon at TXU (214) 875-8802 or Mackie McCrea at Energy Transfer (210) 403-7300.

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