El Paso sells Texas gas interests

Ray Tyson

Debt-heavy El Paso has sold its interests in two subsidiaries that own and operate natural gas-gathering systems and a cryogenic processing plant in Polk County, Texas, to Enterprise Products Partners for $74.5 million, the companies said Jan. 24.

The El Paso subsidiaries own an 80 percent equity interest in the gathering system, consisting of about 89 miles of two-inch to 12-inch pipeline, and a 75 percent equity interest in the Indian Springs gas processing facility. The sale is part of El Paso’s plan to reduce the company’s debt to about $15 billion by year-end 2005. To date, El Paso has announced or closed roughly $4.2 billion of asset sales. In addition, the announced or closed asset sales will eliminate about $1.6 billion of associated non-recourse debt from El Paso’s balance sheet, the company said.

“These entities will fit very well with our core businesses of natural gas gathering and processing, and will strengthen our group of fee-based assets,” said O.S. “Dub” Andras, Enterprise’s chief executive officer.

The Indian Springs processing plant has capacity to process up to 120 million cubic feet per day of natural gas. In addition, there is an idle 20 million cubic feet per day train available for restart to support an increase in gas volumes, Enterprise said.

The Indian Springs plant also is sourced from the Polk County gas gathering systems, as well as the nearby Big Thicket gathering system. Big Thicket is a 240-mile pipeline system located in Tyler and Hardin counties that is owned and operated by Enterprise.