American Midstream to buy DCP gas processing assets on US Gulf

American Midstream has agreed to acquire onshore natural gas processing and offshore natural gas gathering and transportation and oil gathering assets from DCP Midstream for a total cost of near $115 million.

The acquisition complements American Midstream’s High Point system located in Southeast Louisiana, and improves its ability to compete for increased shallow-water and deep-water production from new drilling in the prolific oil and gas eastern region of the Gulf of Mexico, according to company officials.

The acquisition is expected to close in August 2014, subject to approval under Hart-Scott-Rodino and other customary closing conditions.

The assets to be acquired include the Mobile Bay gas processing plant, the Dauphin Island gathering and transmission system and DCP’s interest in the Main Pass Oil Gathering System.

Asset details include:

• Mobile Bay is a 300 million cubic feet per day (MMcf/d) cryogenic gas processing plant located in Mobile County, Alabama , and is currently operating at nearly 70% of available capacity.
  
  
• DIGP is a 270-mile FERC and non-FERC regulated gas gathering and transmission system that delivers gas to the Mobile Bay plant, and has a design capacity of approximately 1 billion cubic feet/day. Additional production from new and existing customers on DIGP is expected to add approximately 70 MMcf/d in processed volumes at Mobile Bay by the end of 2015 on an exit-rate basis.
  
  
• MPOG is an oil gathering system with a design capacity of 160,000 bpd. American Midstream will acquire DCP’s 67% interest in MPOG. MPOG is operated by Panther Midstream, the minority interest owner.

 

“We are excited to acquire assets that complement and enhance our current offshore gas gathering and transmission business in the eastern Gulf of Mexico,” said Steve Bergstrom, CEO of American.

“The acquisition is consistent with our growth strategy to pursue third-party and bolt-on opportunities, and upon closing the acquisition we will have the ability to offer oil gathering and natural gas processing services to offshore producers, which will allow us to more effectively compete for deep-water Gulf of Mexico production," he continued.

"Drilling and permitting activity in this region of the Gulf continues to increase after the end of the drilling moratorium, and we are well positioned to capture incremental volume."

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