HOUSTON - May 3, 2010 - CenterPoint Energy Field Services, Inc. (CEFS), an indirect, wholly-owned natural gas gathering and treating subsidiary of CenterPoint Energy, Inc. (NYSE: CNP), announced today that on April 29, it entered into new long-term agreements with subsidiaries of Encana Corporation and Shell to provide gathering and treating services for their growing Haynesville Shale natural gas production located in portions of De Soto, Red River, Sabine and Natchitoches parishes in northwest Louisiana. The system will be known as the Olympia Gathering System. It will be interconnected with CEFS’s Magnolia Gathering System, also in the Haynesville Shale, which is being built to support Encana and Shell natural gas production in De Soto and Red River parishes.
Olympia Gathering System
Under the terms of these new agreements, CEFS acquired existing facilities from Encana and Shell and will expand them to gather and treat up to 580 million cubic feet per day (MMcf/day) of natural gas. If Encana and/or Shell elect, CEFS will expand its facilities in order to gather and treat up to an additional 520 MMcf/day. The agreements also include volume commitments.
"We are gratified that Encana and Shell have given us the opportunity to expand our reach in the Haynesville Shale and provide gathering services for their expanding production," said Bill May, division senior vice president of Marketing and Business Development for CEFS. “We are committed to a long and mutually beneficial relationship."
Gathering and treating services from the acquired facilities started immediately. New construction to reach 580 MMcf/day includes more than 180 miles of pipelines, nearly 8,000 horsepower of compression and over 680 MMcf/day of treating capacity. CEFS estimates that the cost for the Olympia Gathering System, including the purchase of existing facilities, will be between $400 million and $425 million. Depending on expansion elections by Shell and Encana, CEFS would invest as much as $175 to $200 million for additional facilities.
Magnolia Gathering System
Under the agreements with Shell and Encana executed in September 2009 for gathering and treating services in northwest Louisiana of the Haynesville Shale, CEFS has 900 MMcf/day of total capacity under construction. The construction of the 700 MMcf/day base facility is running ahead of schedule with substantial volumes flowing. Known as the Magnolia Gathering System, it is expected to be fully in service by year-end. An expansion by 200 MMcf per day requested in March 2010 is currently under construction, and is expected to be placed into service in the first quarter of 2011.
Upon completion of the currently committed expansions of the Magnolia and Olympia Gathering Systems, the combined systems will be capable of gathering nearly 1.5 billion cubic feet (Bcf/day) of natural gas per day. If all remaining expansions are elected, the two systems will be capable of gathering 2.8 Bcf/day.
"CenterPoint Energy Field Services is extremely pleased to have been selected to provide additional gathering services for two outstanding producers," said C. Gregory Harper, senior vice president and group president of CenterPoint Energy's Pipelines and Field Services group. "The combination of the Olympia and Magnolia projects under way with Encana and Shell makes CenterPoint Energy a leading gatherer in the Haynesville Shale both in system capabilities and committed volumes."
The agreements are with Encana Oil & Gas (USA) Inc., an indirect, wholly-owned subsidiary of Encana Corporation (NYSE, TSX: ECA), and SWEPI LP, an indirect wholly-owned subsidiary of Royal Dutch Shell plc (NYSE: RDS-A).
CEFS owns and operates approximately 3,800 miles of gathering pipelines and processing plants that collect, treat and process natural gas from approximately 150 separate systems located in major producing fields in Arkansas, Louisiana, Oklahoma and Texas. CEFS gathers approximately 1.6 Bcf/day of natural gas and, either directly, or through its 50 percent interest in a joint venture, and has more than 400 MMcf/day of natural gas processing capacity throughout its entire gathering system.
CenterPoint Energy, Inc., headquartered in Houston, Texas, is a domestic energy delivery company that includes electric transmission & distribution, natural gas distribution, competitive natural gas sales and services, interstate pipelines, and field services operations. The company serves more than five million metered customers primarily in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma, and Texas. Assets total nearly $20 billion. With about 8,800 employees, CenterPoint Energy and its predecessor companies have been in business for more than 135 years. For more information, visit the Web site at www.CenterPointEnergy.com.
This news release includes forward-looking statements. Actual events and results may differ materially from those projected. The statements in this news release regarding future financial performance and results of operations and other statements that are not historical facts are forward-looking statements. Factors that could affect actual results include the timing and outcome of appeals from the true-up proceedings, the timing and impact of future regulatory, legislative, and IRS decisions, effects of competition, weather variations, changes in CenterPoint Energy's or its subsidiaries' business plans, financial market conditions, the timing and extent of changes in commodity prices, particularly natural gas, the impact of unplanned facility outages, and other factors discussed in CenterPoint Energy's and its subsidiaries' Form 10-Ks for the fiscal year ended December 31, 2009, and other filings with the SEC.