Dynegy to expand processing capacity in north Texas

HOUSTON, Texas, Aug. 7, 2001 – Dynegy Inc. today announced plans to build a second natural gas processing facility in Chico, Texas.

The new Chico gas processing facility will provide an additional 150 million cubic feet per day (mmcf/d) of processing capacity. The facility will be adjacent to Dynegy’s existing plant, bringing Dynegy’s total processing capability in the area to 250 mmcf/d.

The new plant is in response to processing opportunities resulting from increased drilling and production activity of the Barnett Shale formation in North Texas. New fracturing techniques have enabled producers to tap previously undeveloped gas reserves in the region. Dynegy, through long-term contracts with producers, has the right to gather, compress and process gas volumes from more than 100,000 acres of leases in the Barnett Shale. Commercial operation of the new facility is expected to begin during the second quarter of 2002.

“This project demonstrates our ability to capture and execute on incremental growth opportunities in one of the key producing regions of the country,” said Steve Furbacher, president of Dynegy Midstream Services, L.P. “In addition to enhancing our strategic position in the region, this project also demonstrates our ability to optimize existing assets.”

In addition to the new Chico facility, Dynegy owns interests in 26 other gas processing plants, including 16 plants it operates, as well as associated and stand-alone natural gas gathering pipeline systems. These assets are primarily located in the key producing areas of Texas, Louisiana and New Mexico. During 2000, the company processed on average 2.1 billion cubic feet per day (Bcf/d) of natural gas and produced on average 97,000 barrels per day of natural gas liquids.

The new Chico gas processing plant will create approximately 150 new construction jobs. Once full commercial operation is achieved, the facility will be operated by existing Chico personnel.

Dynegy Inc. is a energy merchant and power generator in North America, the United Kingdom and Continental Europe. A Fortune 100 company, Dynegy in 2000 established its communications business, Dynegy Global Communications, which is engaged in providing network solutions and connectivity to wholesale customers worldwide.

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