Texas Eastern buying Chaparral, Quanah pipelines from Koch

Jan. 10, 2002
Texas Eastern Products Pipeline Co. LLC is buying the Chaparral and Quanah pipelines in Texas from Diamond-Koch partnerships for $130 million.

By the OGJ Online Staff

HOUSTON, Jan. 10 -- Texas Eastern Products Pipeline Co. LLC, the general partner of TEPPCO Partners LP, is buying the Chaparral and Quanah pipelines from Diamond-Koch II LP and Diamond-Koch III LP. Shareholders in those Diamond-Koch companies are affiliates of Valero Energy Corp. and Koch Industries Inc. The $130 million deal is expected to close in February.

Chaparral is an 800-mile pipeline from West Texas and New Mexico delivering natural gas liquids to fractionators and storage at Mont Belvieu, Tex. The 170-mile Quanah pipeline is a West Texas NGL gathering system. It begins in Sutton County and connects to the Chaparral pipeline near Midland, Tex.

The pipelines are connected to 27 gas plants in West Texas and have 28,000 hp of capacity at 14 stations. The transaction also includes the San Andres underground storage facility in Andrews County, Tex., with 220,000 bbl of capacity.

Duke Energy Field Services LP will operate the pipelines for TEPPCO, which projects first full-year earnings before interest, taxes, depreciation, and amortization from the Chaparral and Quanah systems of $16 million.

William Thacker, TEPPCO chairman, CEO, and general partner, said, "This acquisition supports our strategy of building a base for long-term growth by pursuing new fee-based assets that fit the master limited partnership structure. Over the last 2 years TEPPCO has announced more than $900 million in acquisitions, and we remain committed to completing accretive acquisitions of $300 million to $400 million in 2002."