Amoco Production Co. and Williams Natural Gas Co., Tulsa, have agreed to resolve a dispute that could markedly increase natural gas operations in Kansas.
Here are key elements of the agreement, some of them subject to regulatory approvals:
- All lawsuits and pending claims between the two companies regarding gas purchase arrangements will be resolved.
- New agreements have been signed by the companies that could result in "substantial investments" in programs to develop, gather, process, market, and transport Kansas Hugoton field gas.
- Amoco will receive a $35 million cash payment from Williams and a commitment by Williams to pay $40 million more under certain circumstances. The payments will settle a gas price dispute over gas previously purchased under a contract between the two companies. Williams believes nearly all payments can be recovered from its customers under Federal Energy Regulatory Commission procedures.
- Consistent with federal regulatory changes and the resulting termination of Williams' gas merchant function, the two companies will end a contract that dates to 1950. The companies expect, however, that substantial volumes of Amoco gas will still be carried on Williams' pipeline system from Hugoton field to markets in Kansas, Missouri, and off Williams' transportation systems.
- Williams Natural Gas will transfer to Williams Field Services Group ownership of the gathering system that serves Amoco production in Hugoton field. Amoco will operate these facilities, which will be expanded by Williams to handle an expected increase in production from the field. All of the estimated 45 Williams employees affected by the transfer will be offered jobs with Amoco or at other Williams facilities.
- Amoco will sign a 20 year gas sales contract with Western Resources Inc. under which Western will be able to buy as much as 170 MMcfd from Hugoton field. Amoco has signed a gas processing agreement with Trident NGL to recover natural gas liquids from Trident's Hugoton Jayhawk plant near Ulysses, Kan. Amoco and Trident are continuing engineering studies for construction of a 500 MMcfd processing plant at the Jayhawk site.
