Union Pacific Fuels and three Wichita, KS-based affiliates ofKoch Industries exchanged certain gas and gas liquids assets inEast Texas and Southern Louisiana. The Koch companies will receivea portion of Union Pacific’s interest in the Panola Pipeline, whichruns from Carthage, TX, to Mont Belvieu, TX. In addition, the Kochcompanies will receive Union Pacific’s interest in the Mont BelvieuI fractionator as well as the Patterson and Calumet gas plants inSouthern Louisiana.

Union Pacific will receive certain Koch gathering systems inEast Texas. Union Pacific also will receive Koch’s Longview andEast Texas processing plants, which have combined capacity of 190MMcf/d. Terms were not disclosed, and closing is conditioned onregulatory approvals.

“This trade is part of our on-going efforts to better optimizeour natural gas operating assets and improve profitability,” saidJohn Gibson, president of Koch Midstream Gathering and Processing.”The addition of these assets positions us for continued growth inthe gas liquids business in the Texas Gulf Coast region and willboost our ability to add value to our customers.”

Union Pacific spokesman Pat Doyle said the agreement with Kochdid not allow him to comment on terms of the deal.

“With the addition of the Koch assets, UPFI will be able toreduce our cost structure and improve our service in East Texas,”said Don Niemiec, UPFI President. “UPFI will now process 970 MMcf/din East Texas and will gather approximately 530 MMcf/d. Thisexchange will allow us to compete for incremental volumes of gasthat we previously could not access with our existinginfrastructure.”

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