Monday, April 5, 2010

Enterprise to Buy Two Haynesville Area Gathering and Treating Pipeline Systems

Enterprise Products Partners announced last week that it has entered into an agreement to purchase two gathering and treatment systems in north Louisiana and east Texas from M2 Midstream, a private equity-backed company.  The deal, which is valued around $1.2 billion, will involve the purchase of the State Line System in Louisiana and the Fairplay System in Texas.

The State Line system in DeSoto and Caddo Parishes seems to be the main motivation for the transaction.  The pipeline currently is 138 miles with a capacity of 400 MMcf/day and has two treatment facilities.  It is undergoing an expansion, due to be completed in a few months, that will expand the pipeline by 50 miles and increase its capacity to 700 MMcf/day.  Once Enterprise takes over, however, it will be connected to Enterprise's Haynesville Extension to its Acadian system and its capacity can easily be expanded to 1.2 Bcf/day.



The Fairplay system serves Rusk, Panola, Nacogdoches and Gregg counties.  It is 249 miles long and has a capacity of 285 MMcf/day.  After Enterprise takes over, it will be connected to Enterprise's Texas system.


The deal seems to make sense for Enterprise.  It is probably a "fully priced" deal, but it provides the Haynesville Extension with instant business.  Enterprise has been pushing its Acadian Haynesville Extension as a way for Haynesville producers to access the Southeast United States and bypass Perryville, which is a conduit to the Northeast.  It might not validate the concept, but it certainly populates the pipeline.

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