Save for later Print Download Share LinkedIn Twitter Dallas-based Energy Transfer Partners (ETP) has added another major Texas intrastate gas pipeline to its already extensive cross-Texas gas network. On Thursday, ETP purchased 98% of Houston Pipe Line (HPL) and related assets from electric utility holding company American Electric Power (AEP) for almost $1 billion. The transaction also includes the Bammel gas-reservoir storage facility north of Houston, 30 Bfc of working gas, undisclosed working capital and other facilities. The HPL system extends from near the Mexican border in South Texas through the massive Houston Ship Channel industrial market to the Louisiana border and north in East Texas. Total length is around 4,200 miles, with a capacity of 4.2 Bcf/d. The system has connections into or near almost every major industrial site or electricity-generating plant in the area. In addition, multiple interconnections with ETP's existing facilities are already in place, which will facilitate integration of the two pipeline networks. HPL was the key asset of Houston Natural Gas, which merged with interstate pipeline company InterNorth in 1985 to form Enron. Enron sold HPL to AEP in 2001 for $727 million. The deal occurred just months before the financial irregularities that led to Enron's failure later that year become public. AEP then was trying to create a merchant energy business and acquired HPL and a Louisiana pipeline to back its physical gas trading business. Following Enron's collapse and the subsequent meltdown of the merchant sector, AEP elected to focus on its core electric utility business. It sold the Louisiana operations fairly quickly, but HPL was entangled in the Enron bankruptcy, which was concluded in November. ETP has assembled its Texas gas pipeline network in the past three years largely from assets former energy merchants were divesting. The first deal was for Aquila's midstream operations that included a 50% stake in Oasis Pipeline, one of only two gas systems that connects the Waha trading hub in West Texas with Katy, just west of Houston. It then bought the Texas Utilities Fuel system from electric utility holding company TXU. Its primary asset was a line connecting Waha with the Bethel storage facility in East Texas. The most recent acquisition before HPL was Devon Energy's Barnett Shale midstream facilities in North Texas. With the HPL deal, ETP has almost 12,000 miles of natural gas transmission and gathering lines with a combined capacity of 7.6 Bcf/d. In addition, the company has gas treating and processing assets in Texas, Oklahoma and Louisiana, along with the fourth largest retail propane marketing business in the US. --Barbara Shook
