Louisiana chalk to get first gas plant

Oxy U.S.A. Inc. has agreed to dedicate gas from western Louisiana's Masters Creek field area to a processing plant planned by units of El Paso Energy Corp. and Tenneco Energy. The deal signals the first concrete commitment to begin building processing capacity specifically for gas from wells in the eastern extension of the Cretaceous Austin chalk.

Aug. 12, 1996

3 min read

Oxy U.S.A. Inc. has agreed to dedicate gas from western Louisiana's Masters Creek field area to a processing plant planned by units of El Paso Energy Corp. and Tenneco Energy.

The deal signals the first concrete commitment to begin building processing capacity specifically for gas from wells in the eastern extension of the Cretaceous Austin chalk.

A handful of some of the most active operators in the U.S. is ramping up exploration and development drilling in the Louisiana chalk. Companies involved in the play say the Louisiana chalk's potential ranks with that realized in the western part of the trend, which extends across eastern Texas (OGJ, Apr. 29, p. 15).

Union Pacific Resources Group Inc. (UPR), Dallas, also is working on plans to gather and process Austin chalk gas in the Masters Creek area. UPR and Chesapeake Energy Corp., Oklahoma City, are maintaining multirig Austin chalk drilling programs around Masters Creek.

Expansion planned

Cornerstone Natural Gas Inc. unit El Paso Field Services Co. is to construct and operate a cryogenic gas processing plant at Masters Creek with initial capacity of 50 MMcfd. Tenneco Energy is to own 50% interest in the venture.

Partners expect to have first phase facilities operational in the fourth quarter. Preliminary plans call for expanding plant processing capacity to 100 MMcfd and constructing a natural gas liquids pipeline connecting the plant to various markets beginning in 1997.

Oxy is to provide gas feedstock for the facility from Austin chalk wells within a 480 sq mile leasehold in Louisiana's Rapides and Evangeline parishes. Processed gas will flow from the plant into the system of Tennessee Gas Pipeline Co. unit of Tenneco Energy for transportation to market.

William A. Wise, chairman, president, and chief executive officer of El Paso Energy, said the Masters Creek gas processing project is another step in El Paso's plan to expand unregulated businesses.

"We expect Cornerstone's and Tenneco's early presence in the region to position the companies for substantial increases in gas volumes as development continues by other producers," Wise said. "This project is indicative of the synergy that we expect to exist in the future through the planned merger of El Paso and Tenneco Energy."

El Paso in late June said it would acquire Tenneco Energy in a megamerger expected to create one of North America's largest gas and electric power companies (OGJ, July 1, p. 44). El Paso expects to complete the merger by yearend 1996.

Also in June, El Paso acquired Cornerstone through a cash tender offer. The Masters Creek gas processing project marks Cornerstone's first major deal since being acquired by El Paso.