Red Cedar Gathering Co., Durango, Colo.�a joint venture of Kinder Morgan Energy Partners LP and the Southern Ute Indian Tribe�has acquired the Colorado Dry System in La Plata County, Colo.
Located in the northern half of the San Juan basin, the 140-mile system gathers more than 25 MMcfd of gas; it is attached to 125 active wells. Red Cedar purchased the system from the Southern Ute Indian Tribe, which had recently acquired it from El Paso Field Services.
"This acquisition will produce positive results for KMP beginning in the third quarter through our 49% ownership interest in Red Cedar,'' said Richard D. Kinder, chairman and CEO of Kinder Morgan Energy Partners. Kinder said he believes the acquisition "will result in additional expansion opportunities," as the Colorado Dry System is located in an area where drilling is expected to increase.
Frank Tsuru, president and chief operating officer of Red Cedar, said the company has already started construction of a compressor station to increase throughput on the system and reduce line pressures for customers. "By integrating the complementary Colorado Dry System into Red Cedar, we can optimize our gas flow and improve the reliability of the distribution of gas to the town of Ignacio,'' said Tsuru.
The largest gathering company in Colorado, Red Cedar gathers 650 MMcfd on the Southern Ute Indian Reservation in La Plata County. The Red Cedar system includes over 600 miles of pipe, 19 compressor stations, and two CO2 treating facilities.