News Release
Jan. 09, 2002

TEPPCO PARTNERS TO PURCHASE CHAPARRAL AND QUANAH PIPELINES: DUKE ENERGY FIELD SERVICES TO OPERATE AND COMMERCIALLY MANAGE

HOUSTON – Texas Eastern Products Pipeline Company, LLC, the general partner of TEPPCO Partners, L.P., (NYSE:TPP) today announced that it has signed a definitive agreement to acquire the Chaparral and Quanah pipelines from Diamond-Koch II, L.P. and Diamond-Koch III, L.P. Shareholders in these Diamond-Koch companies are affiliates of Valero Energy Corp. and Koch Industries, Inc. The transaction is valued at approximately $130 million and is expected to close in February 2002.

TEPPCO projects first full-year earnings before interest, taxes, depreciation and amortization (EBITDA) from the Chaparral and Quanah systems of approximately $16 million. All of the revenue associated with the acquired assets is either tariff or fee-based. The acquisition will be immediately accretive to income and cash flow.

“This acquisition supports our strategy of building a base for long-term growth by pursuing new fee-based assets that fit the master limited partnership structure,” said William L. Thacker, chairman and chief executive officer of the general partner of TEPPCO. “Over the last two years TEPPCO has announced more than $900 million in acquisitions, and we remain committed to completing accretive acquisitions of $300 million to $400 million in 2002.”

The Chaparral system is an 800-mile pipeline that extends from West Texas and New Mexico to Mont Belvieu, Texas. The pipeline delivers natural gas liquids (NGLs) to fractionators and existing TEPPCO storage in Mont Belvieu. The approximately 170-mile Quanah Pipeline is a NGL gathering system located in West Texas. The Quanah Pipeline begins in Sutton CountyTexas, and connects to the Chaparral Pipeline near MidlandTexas. The pipelines are connected to 27 gas plants in West Texas and have approximately 28,000 horsepower of pumping capacity at 14 stations. The transaction also includes the San Andres facility in Andrews County, Texas – two underground NGL storage wells with 220,000 barrels of combined capacity. The assets will be operated and commercially managed by Duke Energy Field Services, LP (DEFS) under agreements with TEPPCO.

“As the parent company of the general partner of TEPPCO, DEFS is very excited about this acquisition,” said Jim W. Mogg, chairman, president and chief executive officer of DEFS and vice-chairman of the general partner of TEPPCO. “With DEFS’ significant gas processing capacity in West Texas and ownership in two fractionation plants in Mont Belvieu, DEFS is in a position to bring value to the acquisition. This should significantly benefit both TEPPCO and DEFS as we continue to provide quality service to producers in the Permian Basin area.”

The acquisition will initially be funded under TEPPCO’s bank credit facilities. TEPPCO is evaluating permanent financing alternatives.

TEPPCO Partners, L.P. is a publicly traded master limited partnership, which conducts business through various subsidiary operating companies. TEPPCO owns and operates one of the largest common carrier pipelines of refined petroleum products and liquefied petroleum gases in the United States; owns and operates petrochemical pipelines; owns and operates natural gas liquid pipelines; is engaged in crude oil transportation, storage, gathering and marketing; owns and operates a natural gas gathering system; and owns a 50-percent interest in Seaway Crude Pipeline Company and an undivided ownership interest in the Rancho and Basin Pipelines. Texas Eastern Products Pipeline Company, LLC, an indirect wholly owned subsidiary of Duke Energy Field Services, LLC, is the general partner of TEPPCO Partners, L.P. For more information, visit TEPPCO’s website at www.teppco.com.

DEFS is a premier North American midstream energy company that leads or is among the nation’s leaders in the gathering and processing of natural gas and the production, transportation, and marketing of NGLs. Other services include transportation, marketing and storage of natural gas. DEFS has 2,700 employees and operates in 11 states across five of the largest natural gas producing regions in North America, extending from western Canada to the Gulf Coast. The Denver-based company owns and operates 64 plants, 57,000 miles of pipeline and had revenues of $9 billion and assets of $6 billion in 2000. Current volumes exceed 8 Tbtu/d of natural gas and 400,0000 Bbls/d of NGLs.

DEFS was formed by combining the Duke Energy and Phillips Petroleum natural gas gathering and processing businesses. Duke Energy owns approximately 70 percent of the joint venture and Phillips Petroleum owns about 30 percent.  More information is available about the company at www.defs.com.

Except for the historical information contained herein, the matters discussed in this news release are forward-looking statements that involve certain risks and uncertainties.  These risks and uncertainties include, among other things, market conditions, governmental regulations and factors discussed in TEPPCO Partners, L.P. filings with the Securities and Exchange Commission (SEC). 

Contact: Kathleen A. Sauve -- TEPPCO Media Relations
Phone: 713/759-3635
24 Hour Phone: 704/382-8333
Email: ksauve@TEPPCO.com
Contact: Brenda J. Peters -- TEPPCO Investor Relations
Phone: 713/759-3954; toll free: 800/659-0059
24 Hour Phone: n/a
Email: bpeters@TEPPCO.com
Contact: Tom E. Long -- DEFS Investor/Media Relations
Phone: 303/605-1731
24 Hour Phone: 704/382-8333
Email: telong@duke-energy.com