CMS, DEFS Swap Strategic Properties

In a strategic move said to benefit both midstream energy companies, CMS 
Field Services Inc. has swapped some of its natural gas assets in Oklahoma 
and Kansas for some of Duke Energy Field Services' similar assets onshore and 
offshore Louisiana. 

DEFS' natural gas gathering and condensate measuring and transportation 
assets onshore and offshore Louisiana were exchanged with CMS Field Services' 
assets in Oklahoma and Kansas, giving each company more proximity to their 
other assets. The deal closed Dec. 20 and was announced Friday. No financial 
details were disclosed. 

"This transaction makes both strategic and economic sense for CMS Energy," 
said Tim Young, senior vice president of the field services division. In 
1999, CMS Energy acquired Duke Energy's Panhandle Eastern Pipe Line Co. and 
Trunkline Gas Co., and Young said the swap gives CMS more opportunities to 
offer enhanced services to "existing and potential shippers" on CMS-owned 
properties along the Gulf Coast. 

In the deal, CMS obtained 10 offshore gas gathering laterals, a one-third 
ownership in the Atchafalaya Pipeline System and complete ownership in a 
Patterson, LA condensate measuring facility. The 10 offshore gas gathering 
laterals are connected to two offshore pipelines owned by CMS Energy: the 
Trunkline Gas Co.'s Terrebonne system and the Sea Robin Pipeline Co. The 
39-mile-long Atchafalaya Pipeline receives condensate from the Terrebonne 
system, while the Patterson measurement facility measures condensate 
transported through the Atchafalaya pipe. 

In return, Denver-based DEFS, a subsidiary of Duke Energy and Phillips 
Petroleum, obtained two Midcontinent natural gas gathering systems: the 
Bradshaw system in Kansas and the Roaring Creek system in Oklahoma. DEFS also 
will pick up the Miles Hampton and Ulysses systems in Kansas and the 
Christmas Lateral in South Texas. 

"These assets are a great strategic fit with our assets in the area, as they 
will specifically supply to plants with existing capacity," said Michael 
Bradley, senior vice president, DEFS' northern division. Bradley said the 
asset exchange supported the company's growth strategy "optimizing and 
rationalizing assets" and giving the company more flexibility. 

CMS Field Services supplies regions of Louisiana, the Texas Gulf Coast, West 
Texas, Central Texas, the Midcontinent and the Rocky Mountains, and owns 
approximately 5,000 miles of gathering pipeline. DEFS, 70% owned by Duke and 
30% by Phillips, operates in 11 states and across five of the largest natural 
gas producing regions in North America. It owns and operates 71 plants and 
57,000 miles of pipe, with operating territory extending from western Canada 
to the Gulf Coast.