Enterprise Products Partners L.P. and American Midstream Partners, LP have announced they have entered into an agreement under which American Midstream may elect to purchase a 25% interest in Enterprise’s Pascagoula natural gas processing plant. The purchase option is subject to certain conditions, including American Midstream completing modifications to certain facilities on its High Point pipeline system that will provide incremental natural gas volumes with access to the Pascagoula plant.
American Midstream’s High Point pipeline system currently delivers offshore natural gas production to the Enterprise-operated Toca Gas Plant in St. Bernard Parish, Louisiana for processing services. As the result of the pending modifications to the High Point facilities, the Toca plant owners have voted to discontinue operations. Enterprise, along with other Toca plant owners, expect to realise significant operating expense savings from idling the Toca facility and utilising existing processing capacity at the more efficient Pascagoula plant. Customers of the Toca plant will have the option to enter into similar processing arrangements with the Pascagoula facility, which should provide customers with higher netbacks in the form of improved NGL recoveries and reduced energy costs.
“We are pleased to work with American Midstream to find a creative ‘win/win’ solution for our customers and partners in the Toca plant,” said Brad Motal, Senior Vice President, Natural Gas Assets and Marketing of Enterprise’s general partner.
“This agreement further illustrates how strategically positioned midstream companies can find an innovative approach to create a stronger and more reliable processing option for our customers. We appreciate the opportunity to work with a high-quality company such as Enterprise and partner in this solution,” stated Lynn Bourdon III President and Chief Executive Officer.
Locke Lord LLP served as legal counsel for Enterprise and Sidley Austin LLP served as legal counsel for American Midstream for this transaction.