TEPPCO sells Pioneer Natural Gas Processing Plant near Opal
Sold to Enterprise Products Partners LP; New cryogenic plant planned
April 3, 2006
TEPPCO Partners, L.P. (NYSE:TPP) announced on April 3rd that its affiliate, Jonah Gas Gathering Company (JGGC), has completed the sale of the Pioneer silica gel natural gas processing plant located near Opal, Wyo., to an affiliate of Enterprise Products Partners L.P. for $38 million. Additionally, as part of the transaction, Enterprise purchased JGGC's rights to process natural gas originating from the Jonah and Pinedale fields located in southwest Wyoming.
"TEPPCO believes that our Jonah Gas Gathering system will benefit from Enterprise's plans to expand Pioneer and build a new cryogenic plant," said Leonard W. Mallett, acting chief executive officer of the general partner of TEPPCO, in a company news release. "We will use the proceeds from the sale of the Pioneer plant for future growth projects, to retire debt or for other partnership purposes."
TEPPCO Partners, L.P. is a publicly traded partnership with an enterprise value of approximately $4 billion, which conducts business through various subsidiary operating companies. TEPPCO owns and operates one of the largest common carrier pipelines of refined petroleum products and liquefied petroleum gases in the United States.
A companion news release from Enterprise Products partners L.P. stated, "Due to the expected increase of natural gas production from the Jonah and Pinedale fields, Enterprise has commenced construction to double the plant's processing capacity from 300 million cubic feet per day ("MMcf/d") to 600 MMcf/d. Additionally, engineering work continues on a previously announced new 650 MMcf/d cryogenic natural gas processing facility to be located adjacent to the silica gel plant. Both projects are on schedule with the expansion of the silica gel plant expected to be completed by mid-2006 and the new cryogenic plant expected to begin service by the end of the third quarter of 2007. Natural gas liquids produced from the new cryogenic processing plant will be transported to market through Enterprise's Mid-America Pipeline and Seminole Pipeline systems that extend from the Rockies to the Texas Gulf Coast region, and will be fractionated at Enterprise's fractionators in Hobbs, Texas, which is currently under construction, or at the partnership's complex in Mont Belvieu, Texas."
"We are pleased to acquire the Pioneer silica gel plant which provides a first step to processing natural gas from the prolific Jonah and Pinedale fields," said Robert G. Phillips, Enterprise's President and Chief Executive Officer. "This is an accretive transaction that provides an attractive opportunity to extend our natural gas processing franchise into one of the fastest growing natural gas producing regions in North America. The cryogenic plant will have the flexibility to operate from a conditioning mode to full recovery, and will support our downstream pipeline and fractionator expansions which are central to Enterprise's recently announced Rocky Mountain expansion strategy."