American Midstream expands Gulf of Mexico presence with $115M pipeline deal

American Midstream Partners said on Tuesday (July 15) it would spend $115 million to buy an Alabama natural gas plant as well as offshore oil and gas pipeline from a competitor, adding to the company's existing oil and gas infrastructure in southeast Louisiana.

The deal boosts the Denver-based company's oil and gas pipeline network in the Gulf of Mexico as drilling activity ramps up offshore.

According to a release, American Midstream has agreed to buy the assets from DCP Midstream, another Denver-based energy company with pipeline and other infrastructure interests along the Gulf Coast.

The deal includes DCP's gas processing plant in Mobile Bay, Ala. as well as the company's Dauphine Island oil and gas pipeline network.

American Midstream also has agreed to purchase DCP's interest in the Main Pass Gathering System, a crude oil pipeline system located on the Outer Continental Shelf in the Gulf of Mexico.

American Midstream CEO Steve Bergstrom said in a statement the deal makes the company more competitive in the Gulf of Mexico, where the demand for pipeline to gather oil and gas from offshore wells and pump it back to shore is expected to rise in coming years.

The company said the Alabama assets would help the company capture more business from the eastern Gulf of Mexico, in particular.

The federal government offered acreage in the eastern Gulf at its March lease sale, the first time since 2008. The sale attracted no bids, but industry onlookers remain bullish on the area.

American Midstream owns several oil and gas pipeline and processing systems in southeast Louisiana, including the 110-mile Gloria oil and gas gathering system, which stretches through Lafourche, Jefferson, Plaquemines, St. Charles and St. Bernard parishes.

The company expects the deal to close in August after regulatory review.