El Paso Energy Corp., Houston, has completed the divestiture of three US pipeline systems. The transactions were needed to satisfy the US Federal Trade Commission's conditions for approval of El Paso's $6.2 billion merger with Sonat Inc., Birmingham, Ala. (OGJ, Nov. 1, 1999, p. 46; Mar. 22, 1999, p. 37).
The three sales agreements total roughly $620 million. Sold were: El Paso's East Tennessee Natural Gas Co. pipeline system; its one-third interest in Destin Pipeline Co. LLC's system; and the Sea Robin Pipeline gas and condensate system, which is owned by Sonat units Southern Deepwater Pipe- line Co. LLC and Southern Offshore Pipeline Co. LLC.
The three divestments
Duke Energy Gas Transmission, a unit of Duke Energy Corp., Charlotte, NC, acquired the 1,100-mile East Tennessee system for $386.3 million. Duke Energy is calling the acquisition an "excellent fit" for its existing pipeline system. The 700 MMcfd East Tennessee system already intersects with one of Duke's two natural gas systems-the 9,220-mile Texas Eastern Transmission Corp. pipeline.
The East Tennessee system consists of two mainlines in central Tennessee that connect near Knoxville before extending to a site near Roanoke, Va. The system serves 40 local distribution companies and 16 industrial customers.
The transaction is expected to close in the first quarter, pending FTC approval.
For Duke, the acquisition comes at a time when it is striking out on numerous projects. One of the most recent was the signing of a definitive agreement with Phillips Petroleum Co. to merge its gas gathering and processing business, Duke Energy Field Services, with Phillips's gas processing and marketing unit (OGJ, Jan. 3, 2000, p. 24).
Meanwhile, CMS Energy Corp., Dearborn, Mich., agreed to acquire the 445-mile, 1 bcfd Sea Robin system for $72 million. The system lies west of CMS Trunkline Gas Co.'s existing Terrebonne systems, mainly in the Gulf of Mexico off Louisiana. Sea Robin will be added to the CMS Panhandle Pipe Line Co. system, CMS Energy said.
CMS Energy says the acquisition will increase "significantly" its gas gathering and supply resources in the gulf. "This system," the company said, "in combination with our existing assets, will be a platform for CMS to provide increased gas services to producers and shippers, as well as providing new supply sources for the company's Trunkline Gas pipeline system."
The Sea Robin system comprises five offshore valving platforms, one compressor platform, 405 miles of offshore pipeline, 40 miles of onshore pipeline, and one compressor station.
Finally, El Paso entered an agreement with an undisclosed buyer to divest its one-third share in Destin Pipeline for $160 million. The buyer will not be identified until the partners in the 255-mile, 1 bcfd project-BP Amoco PLC and Shell Oil Co. affiliate Tejas Energy LLC-have adequate time to exercise their right of first refusal to acquire the one-third stake (the deadline is Feb. 10). BP Amoco and Tejas jointly own a new gas processing plant at Pascagoula, Miss., where the Destin system makes landfall.
