News Release
April 17, 1998

DAUPHIN ISLAND GATHERING PARTNERS COMPLETES PHASE I OF EASTERN GULF TRANSMISSION EXPANSION

HOUSTON — The first phase of the Dauphin Island Gathering System (DIGS) expansion has been placed into service, making it the first eastern Gulf of Mexico pipeline to transport deep-water natural gas production to onshore facilities in Alabama.

When complemented by the second phase of its expansion, DIGS -- a project of the Dauphin Island Gathering Partners (DIGP) -- will have the capability to deliver up to 1 .1 billion cubic feet per day of natural gas to onshore markets and pipelines in south Alabama and south Louisiana. The system will have hub platform capabilities at multiple locations on the Outer Continental Shelf and in deep-water areas. It is expandable with the addition of compression.

The system is positioned to accommodate new shallow- and deep-water supply developments. Existing rich gas production sources and those that will be attached in the future will be offered gas processing services at the Mobile Bay Processing Plant in Mobile, Ala. The plant is expected to be operational later this year.

Phase I of the DIGS expansion is a 65-mile, 24-inch-diameter natural gas line that connects DIGP’s gathering system in Main Pass Blocks 225 and 223 with its system in Alabama State Tract 73. Six producers have executed long-term agreements for a total of 192,500 dekatherms per day of transportation capacity on Phase I. Total capacity of Phase I is 230,000 dekatherms per day.

Completion of Phase I, along with additional dedications of gas to DIGP’s gathering and transmission system, further enhances the partnership’s long-term competitive position in the eastern Gulf of Mexico producing region.

Phase II of the expansion is a 13-mile, 24-inch-diameter continuation of Phase I, stretching from Alabama State Track 73 to the new onshore Mobile Bay Processing Plant near Coden, Ala. Phase II, which is under construction, is expected to be completed this summer. The completed expansion will form a pipeline connecting rich, deep-water gas directly to the new processing plant and interstate outlets in south Alabama.

DIGP also will be connecting significant new supplies to the expanded system, including:

In addition, DIGP has executed a letter agreement with Newfield Exploration Company to connect its Main Pass Block 256 production to DIGS by the first quarter 1999. DIGP also has executed a letter of intent with the owners of the Virgo project to connect its Viosca Knoll Block 823 production to DIGS by the first quarter 2000. This deep-water project will provide DIGP with a platform in 1,320 feet of water to serve as a strategic hub for the attachment of new supplies from other deeper water developments.

DIGP is a partnership comprised of subsidiaries of Duke Energy (37.3 percent), MCN Energy Group Inc. (34.5 percent), The Coastal Corporation (13.6 percent), Consolidated Natural Gas Company (13.6 percent), and Offshore Energy Development Corporation (1 percent).

Contact: Mary Alice Rogers
Phone: (704) 382-8333
24 Hour Phone: (704) 382-8333
Email: media_relations@duke-energy.com