Newspaper article THE JOURNAL RECORD

Tenneco Plans $632 Million Sale of Gas Liquids Business

Newspaper article THE JOURNAL RECORD

Tenneco Plans $632 Million Sale of Gas Liquids Business

Article excerpt

HOUSTON (AP) _ Tenneco Inc. agreed Monday to sell its natural gas liquids business to Enron Corp. for $632 million, in a move that analysts said would benefit both Houston companies.

The proposed transaction is part of a $2 billion restructuring plan Tenneco announced in September to boost its financial health.

Tenneco president Michael H. Walsh said the sale constitutes "the key element of the company's non-core business divestiture program and is a cornerstone of the overall action plan."

For Enron, the purchase is a step toward expansion into all aspects of the natural gas business. The $13 billion company currently operates the nation's largest natural gas transmission system.

"This is an interesting deal, because in my view both companies come out winners," said Foster H. Corwith, an analyst with Dean Witter Reynolds in New York.

The sale includes a methyl tertiary butyl ether, or MTBE, plant under construction in La Porte, a methanol plant in Pasadena and a butane isomerization plant in La Porte. Methyl tertiary butyl ether is a blending component that is a key ingredient in reformulated gasoline.

The deal also includes 9 million barrels of underground storage, a 250-mile liquids pipeline, and interests in three gas processing plants and a large natural gas fractionator.

Enron officials predicted that demand for methyl tertiary butyl ether will climb as various federal Clean Air Act and California state standards are implemented in the next few years. Some 75 percent of the methyl tertiary butyl ether plant's capacity of 15,300 barrels per day already have been signed for three- to five-year sales contracts, said Kenneth L. Lay, Enron's chief executive.

"The MTBE plant is clearly the crown jewel here, and I think you're going to see sharply higher demand for that product in the years to come because of the clean air requirements," Corwith said. "It is an exceptionally strong market throughout the 1990s. …

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