The Eagle Ford shale play spans some 400 miles, from the Mexican border to some eastern Texas counties. The source rock in South Texas—where most of the development activity is occurring—has different maturity levels, with three distinct area development windows for oil, condensate and dry gas. The areas correspond to the shallow, intermediate and deeper parts of the play, respectively.

Today, activity has slowed somewhat in the dry-gas zone in favor of development in the condensate-rich and eastern parts of the oil zone, primarily due to the higher returns that producers can realize for oil and natural gas liquids (NGL) relative to dry natural gas. This trend is expected to continue due to the current overall U.S. natural gas supply-demand balance forecasts and the resultant forward gas price path.

In some areas, values from condensate produced along with natural gas are helping overall economics and is keeping gas-development efforts on track. Yet, in general, the true gas-only potential must wait for more favorable market conditions.

The production-to-market pipeline connection point on Chesapeake Energy Corp.’s Brownlow #1H moves Eagle Ford Gas.

In mid-2010, the upstream development of the liquids-rich portion of the Eagle Ford play took off, with the epicenter in Karnes and Gonzales counties. Following the successes in those two counties, operators concentrated their efforts on the liquids-rich portions along the so-called geological border between the condensate and oil zones in Dimmit, La Salle, McMullen and Live Oak counties.

Since March 2011, activity has also increased in Frio, Atascosa and Zavala counties, which lie exclusively within the oil zone. Some of the larger operators in the Eagle Ford play are Anadarko Petroleum Corp., Apache Corp., Chesapeake Energy Corp., ConocoPhillips, EOG Resources Inc., Forest Oil Corp., Marathon Oil Corp., Newfield Exploration Co., BHP Billiton Petroleum Ltd., Pioneer Natural Resources Co., Rosetta Resources Inc., Shell Western E&P Plc, and SM Energy Co. Many of these producers have made contract commitments to anchor new midstream infrastructure projects to support their short-term and long-term development needs.

New modes

Development in the Eagle Ford continues to ratchet upward, providing ample use of existing midstream facilities as well as triggering significant new infrastructure need. With crude oil, condensate, associated gas and traditional dry gas present, numerous new projects will provide gathering capacity and access to markets. In many cases, truck and rail services are providing interim movement of crude oil and condensate until near-term and long-term pipeline infrastructure becomes available.

Existing natural gas facilities are being used where possible to manage production until long-term arrangements can be installed. Looking ahead, many of today's short-term infrastructure constraints for liquids, gas liquids and gas will be eliminated by mid-2013, and operators should then be able to receive full value for the majority of their products.

Also, gas-gathering systems, built by producers to support their initial wells, have connected, where possible, into existing pipelines until longer term infrastructure is in place to provide maximum recoverable value. In some cases, pipeline operators have been encouraged to convert existing gas systems from their traditional dry-gas service mode to perform future rich-gas or condensate service.

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The multifaceted impact of the Eagle Ford is so significant that the entire South Texas gas-, NGL- and oil-pipeline networks will be transformed into a new mode of future operations.

As a result of significant discoveries in the oil- and condensate-rich portions of the play, existing crude gathering systems are determined to need major modification and expansion. Significant also is the need for these products to be gathered, aggregated and able to reach definitive points for further distribution or direct access to markets.

Many of these projects involve new construction to gather crude either into existing, new or expanded infrastructure. As such, a number of differing pipeline and terminal projects are under way to meet these requirements.

New construction

Valero Energy Corp. and Harvest Pipeline Co. are building a crude pipeline from Atascosa and Live Oak counties to connect directly to Valero's existing Three Rivers refinery. The pipeline is expected to be in service by December 2011. Valero's refinery has been using primarily imported crude, but Eagle Ford crude is already beginning to replace that, and likely will become the principal crude source.

The Three Rivers refinery has been expanded to 100,000 barrels (bbl.) per day, while the initial capacity of the new gathering pipeline will be 50,000 bbl. per day, but could be expanded to 70,000 bbl. per day.

Elsewhere, El Paso Midstream Energy Partners LP (EPM), as a part of its proposed Camino Real Pipeline project, is operating 70 miles of crude gathering facilities in LaSalle County. Capacity of the facilities is 80,000 bbl. per day. Two oil terminals will provide truck-loading capabilities, and the system also can provide for on-lease loading. The facility is under construction, and service is anticipated to commence in third-quarter 2011. Connections to other oil pipelines in the area will be driven by customer requests.

Also, a crude storage and transportation hub is under development near Gardendale in LaSalle County. A number of projects have been proposed for the area, and several have reached the commitment or construction stage. These facilities include crude gathering pipelines, truck and rail terminals, local storage and an export pipeline and storage terminal at Corpus Christi. An additional pipeline will connect the Gardendale Hub to a terminal at Three Rivers, where existing crude pipelines route to Corpus Christi. These projects are highlighted in Table 1.

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Separately, anchor shipper Anadarko has completed long-term arrangements with Harvest Pipeline to extend the existing Arrowhead crude pipeline system to Cotulla in LaSalle County. This new 12-inch-diameter pipeline will have an initial capacity of 50,000 bbl. per day and can be expanded to 90,000 bbl. per day.

From Cotulla, the crude will route via a joint Koch Pipeline Co. LP-Arrowhead Pipeline LP tariff to Corpus Christi via either a reactivated NuStar Energy LP crude pipeline, wherein Koch has leased 30,000 bbl. per day of capacity, or via the existing or expanded Koch Pettus-to-Corpus Christi pipeline system.

For 2011, Koch reported that it had various projects that added more than 140,000 bbl. per day to its South Texas crude gathering capability. In response to continuing need, Koch Pipeline will expand its Pettus-to-Corpus Christi Pipeline to move an additional 120,000 bbl. per day of Eagle Ford crude by late 2012.

On the Corpus Christi end, Koch is building a new line from Corpus Christi to its affiliate, Flint Hills Resources LP's Ingleside waterborne terminal, to increase its capability, and service is expected by third-quarter 2012. The completion of the Ingleside pipeline is timed with Flint Hills' upgrades to its marine terminal that will have the capacity to ship, via barge, up to 200,000 bbl. per day of liquids to other Gulf Coast markets.

More projects

Meanwhile, Enterprise Products Partners LP, one of the largest midstream infrastructure players in South Texas, has decided to enter the Eagle Ford arena in a big way.

Phase 1 of its Eagle Ford Crude Oil Pipeline will consist of 143 miles of 24-inch-diameter line from Wilson County to existing crude facilities near Sealy, with a capacity of 360,000 bbl. per day, to be completed by second-quarter 2012. This project includes a pump-station expansion on the existing Rancho Pipeline at Katy, an additional 2.2 million bbl. per day of crude storage capacity at Sealy, 95 miles of crude gathering and several truck-loading terminals.

Phase 2 will originate at the southern terminus of the Phase 1 segment and extend southwesterly to a site near Gardendale. At Gardendale, a developing crude and condensate aggregation point, Enterprise plans 500,000 bbl. of storage.

Whereas other facilities at Gardendale are meant to transport crude into the Corpus Christi area to access markets there, Enterprise would route a portion of the area's crude and condensate to Houston Ship Channel markets. Phase I will be finished by second-quarter 2012 and Phase 2 by first-quarter 2013. Table 2 provides detail on the numerous crude implementations proposed by Enterprise.

In addition, Plains All American Pipeline LP plans to build a new 130-mile crude and condensate pipeline from the western portion of the Eagle Ford play and a marine terminal facility in Corpus Christi, with 1.5 million bbl. of storage capacity. Chesapeake Energy Marketing Inc. will be the anchor shipper for the project. Chesapeake and Flint Hills Resources, which operates a 300,000 bbl. per day refinery in Corpus Christi, have options to participate in ownership. The project is expected to be in service fourth-quarter 2012 with up to 300,000 bbl. per day of capacity.

As a part of its purchase of a 25% interest in Petrohawk Energy Corp.'s (acquired by BHP Billiton Ltd.) natural gas gathering and treating business in the Eagle Ford, Kinder Morgan Energy Partners LP agreed to provide a 300,000 bbl. per day crude and condensate pipeline from the Eagle Ford directly to Houston Ship Channel markets. To accommodate this, Kinder Morgan proposes to build 61 miles of new pipeline to the Black Hawk Field near Cuero and agrees to convert 109 miles of existing Kinder Morgan Texas gas pipeline near Deer Park from natural gas to liquid service, to be in service by third-quarter 2012.

Also, the Kinder Morgan-Petrohawk joint venture will be operating more than 280 miles of natural gas gathering assets and some 112 miles of condensate gathering assets by year-end 2011.

Service vehicles traverse the dusty caliche roads near Tilden, in McMullen County, Texas, to support midstream development in the Eagle Ford shale.

Trucks and terminals

NuStar Logistics LP and TexStar Midstream Services LP plan to build and operate a new 65-mile, 12-inch-diameter pipeline for gathering up to 120,000 bbl. per day of crude and condensate from Frio County to move to Nu-Star's existing crude terminal at Three Rivers. The system would handle sweet and sour crude and condensate.

TexStar will operate at least two truck-loading facilities along the route to receive additional crude. At Three Rivers, a connection will be made to NuStar's existing 16-inch-diameter crude line, which will have an ultimate delivery capacity of 200,000 bbl. per day and terminates in Corpus Christi. Implementation is expected in third-quarter 2012.

Republic Gathering & Marketing LLC and Palletized Trucking Inc. formed a joint venture to transport crude out of the Eagle Ford shale. Republic expects to purchase and transport 600,000 bbl. per month by the end of 2011.

Also, U.S. Development Group's Gardendale-Eagle Ford Crude Terminal is nearing completion. Sited near Cotulla on Union Pacific Railroad's main line between Laredo and San Antonio, about 80 miles south of San Antonio, the terminal is designed to handle crude, condensate and other related products. The terminal, which should be completed by third-quarter 2011, will have a maximum capacity of 40,000 bbl. per day.

EOG Resources Inc. is using crude-by-rail to export crude prior to long-term pipeline availability, much like its operation in the Bakken play of North Dakota. The facility is currently transporting 4,000 bbl. per day, but will be moving 20,000 bbl. per day of Eagle Ford oil by rail by yearend.

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Natural gas projects

As in the crude transportation sector, there are a number of unique regional projects for gathering and processing Eagle Ford natural gas and handling related NGL products.

In general, project proposals are of two types. The first involves rich natural gas streams that are integrated into relatively proximate existing and expanded South Texas gas and liquids infrastructure. The second type is for gas volumes that are routed to distant plants and might precipitate infrastructure expansions en route. In general, targeted NGL markets are along the Texas coast, as are the numerous NGL fractionators and storage. The largest market and significant fractionation and storage capability exists at the NGL trading hub at Mont Belvieu at the Houston Ship Channel.

Copano Energy LLC will connect its existing 38-mile, 24-inch-diameter DeWitt-Karnes Pipeline to its Houston Central Plant via an additional 58-mile, 24-inch-diameter pipeline. The extension will increase the capacity of the gathering system from 225 million cubic feet (MMcf) per day to 350 MMcf per day by fourth-quarter 2011.

Also, it will expand its processing capability by 400 MMcf per day to a total of 1.1 Bcf per day, and it will restart its local NGL fractionator with a capacity of 22,000 bbl. per day of NGL products. The NGL products will be delivered into existing liquids pipelines connecting to the Houston Central Plant. Start-up of the new processing plant in early 2013 will coincide with Copano's agreement with Formosa Hydrocarbons Corp. at Point Comfort, where Formosa will provide Copano with 200 MMcf per day of gas processing and additional fractionation capability.

Kinder Morgan and Copano will form a joint venture to gather upstream gas from producers and route it through new and existing pipeline facilities to Copano's Houston Central gas processing plant near Sheridan and to two other processing plants where Copano has contracted for added capability and flexibility.

The joint venture, named Eagle Ford Gathering LLC (EFG), will contract for all of the transportation capacity and the various processing plant and fractionation capacities. After conversion of a portion of the Kinder Morgan's Laredo-to-Katy pipeline from dry-gas to rich-gas service, the modified system will transport up to 600 MMcf per day of Eagle Ford gas. About 375 MMcf per day will be routed northward to the Houston Central Plant, while another 225 MMcf per day will be routed eastward to the Kinder Morgan's Tejas Agua Dulce-to-Markham pipeline, a portion of which will also be converted from dry-gas to rich-gas service.

Also, rich gas can be routed through the modified portion of the Tejas system to Williams Partners LP's Markham processing plant (capacity of 100 MMcf per day and an option for up to 200 MMcf per day) or to Formosa Hydrocarbons' processing and fractionation plant (200 MMcf per day). The nearby Formosa plastics plant is also consuming NGLs. Table 3 is a list of the numerous facilities required to put this joint venture arrangement into play.

Integrated service

Elsewhere, DCP Midstream Partners LP is developing an integrated project that will provide gathering, processing, fractionation and marketing services for numerous producers, including ConocoPhillips, Enduring Resources LLC, Murphy Oil Corp., BHP Billiton, Riley Exploration LLC, and the joint venture of Pioneer Natural Resources Co., Reliance Eagle Ford Upstream Holding LP, and Newpek LLC.

DCP will be constructing 130 miles of line to integrate these producers and others into their arrangement. Providing the central trunk for this system will be a 165-mile portion of Trunkline Gas Co.'s interstate gas system, which will be converted to rich-gas service. Altogether, DCP's five gas-processing plants can process about 250 MMcf per day of Eagle Ford gas. DCP might add a sixth plant, with 200 MMcf per day of added capacity, which could be in service by late 2012. If built, DCP's total processing capability in the region would be about 1 Bcf per day. The NGLs would be routed through DCP's NGL pipelines or through the proposed Sand Hills NGL Pipeline.

DCP's Sand Hills pipeline project is meant to serve NGL-production growth in the Permian Basin and the Eagle Ford. The project is a new 700-mile y-grade take-away pipeline from various DCP and Targa Resources Partners LP plants. DCP is seeks to secure 120,000 bbl. per day of transportation commitments for a midyear 2013 startup.

Also, Targa plans to expand its fractionators at its Cedar Bayou-Mont Belvieu facilities by 100,000 bbl. per day, for a total of 393,000 bbl. per day. Table 4 provides a list of these various DCP facilities.

Energy Transfer projects

Energy Transfer Partners LP (ETP) is another company with a variety of infrastructure solutions for Eagle Ford producers.

In late 2010, ETP began providing gathering and processing services for Eagle Ford shippers via its new 50-mile, 350 MMcf per day Dos Hermanos Pipeline originating in Webb County and routing to a connection with ETP's existing Houston Pipeline System. Also, ETP plans to build an 83-mile pipeline from Dewitt County to a LaGrange processing plant, to move some 100 MMcf per day now and 300 MMcf per day in the future.

Recently, ETP announced it will construct a major gas-gathering pipeline, a large processing plant and some additional facilities. Supported by contracts with Rosetta Resources, SM Energy, and Anadarko, the 160-mile, 30-inch-diameter Rich Eagle Ford Mainline will have a capacity of 400 MMcf per day with the ability to expand to 800 MMcf per day. This rich-gas system, expected to be in service by fourth-quarter 2011, will originate in Dimmitt County and extend to the new Chisholm Pipeline, providing deliveries to ETP's existing LaGrange Processing Plant and to a new 600 MMcf per day processing plant to be located in Jackson County.

The new processing plant will be operative by early 2013. Supporting the new Jackson County plant, ETP announced that it will build a 130-mile NGL pipeline to Mont Belvieu, where Lone Star NGL LLC, a joint venture by ETP and Regency Energy Partners LP, will construct a new 100,000 bbl. per day fractionator at Mont Belvieu and new y-grade storage facilities to complement its existing 43 million bbl. of NGL storage capacity. Regency Energy will provide NGL to the pipeline project as well. These facilities will all be in service by early 2013.

Also, with the intent to provide synergies to this developing network of NGL facilities, Lone Star NGL will collect y-grade volumes in West Texas and build a 530-mile NGL pipeline from Winkler County to the Jackson County plant to access the Lone Star NGL pipeline to Mont Belvieu.

Thus, y-grade from plants in the Permian Basin can be routed eastward and be integrated with y-grade from the new Jackson County processing plant, with all NGLs routed to Mont Belvieu for fractionation and storage.

Enterprise Products

In South Texas, Enterprise Products Partners LP operates the largest and most extensive gas gathering and processing operation with seven existing plants and the ability to process up to 1.5 Bcf per day.

Recently, Enterprise proposed a number of projects, including an expansion of its gathering systems, extending its mainline 30 miles west and building its White Kitchen Pipeline, a 46.5-mile gathering lateral from White Kitchen to Catarina.

The company also plans an 86-mile line to connect its Shoup plant to its Schilling plant and an expansion of its mainline from White Kitchen to a newly proposed 600 MMcf per day Eagle Ford processing plant at the new Yoakum facility.

Other projects include new NGL and residue gas handling capabilities at Yoakum, including a 116-mile line to move y-grade to Enterprise storage facilities at Seminole, and a 70-mile residue gas line to its Wilson storage facility.

To support these upstream enhancements, Enterprise will add two new 75,000 bbl. per day fractionators at Mont Belvieu—the first scheduled for service in 2012 and the second in 2013. As upstream volumes ramp-up over time, Enterprise will implement compression along its mainline to facilitate throughput. Table 5 provides detail on the various EPP projects.

New implementation

Growing by acquisition, Regency Energy purchased midstream assets that it will integrate with its existing facilities. Its Eagle Ford expansion will include a 400-mile wellhead gathering system in Webb, Dimmit, and LaSalle counties, some compression and the implementation of four gas and condensate export terminals. The condensate terminals have a capacity of 26,500 bbl. per day. The expansion will occur through 2014 as required by upstream parties.

Separately, Regency announced an expansion of its Tilden treating plant in McMullen County by 20 MMcf per day. The Tilden plant treats sour gas associated with some of the Eagle Ford gas production.

Southcross Energy LLC will provide new natural gas gathering, transportation, and processing services for Swift Energy Co.'s Eagle Ford development in McMullen County when it constructs a 25-mile, 20-inch-diameter pipeline and smaller gathering lines. Expected to be in service in this year, the pipeline system will have a capacity of 120 MMcf per day and extend via Southcross' existing rich-gas pipeline system to its processing plant near Gregory.

Also, Southcross will increase capacity at its Gregory plant to 135 MMcf per day and will install a new 200 MMcf per day gas processing plant in Refugio County, to be in 2012.

El Paso Midstream's Camino Real Gas Gathering System in LaSalle County, with150 MMcf per day, is scheduled to be in service before yearend 2011 to gather rich gas for El Paso and third parties.

Meritage Midstream Services LLC is building 25 miles of gathering pipeline in Webb County and will provide treating service to Swift Energy and others. The new pipeline will connect to Meritage's existing South Callahan treating facility, which Meritage will expand, and to its existing Escondido gas gathering system.

Separately, Meritage entered into an agreement with Laredo Energy to build a 48-mile, 16-inch-diameter pipeline to provide market access for Eagle Ford producers.

Elsewhere, NET Holdings Management LLC recently announced that it would provide dry-gas transportation for Murphy Exploration & Production Co. Eagle Ford Midstream LP will build a 110-mile gas pipeline to the vicinity of Tilden, where it will connect to NET's existing LaSalle Pipeline as well as to Transco Pipeline's McMullen lateral. A planned second phase of the project will provide delivery at the Agua Dulce Hub near Corpus Christi.

Rich-gas conversions

Numerous existing interstate and intrastate gas pipeline companies in South Texas will be providing transportation of dry-gas volumes from the Eagle Ford to the extent their facilities are proximate to development. As many of the existing gas processing plants already connect to many of these pipeline systems, residue gas from those plants will continue to flow into these facilities.

The Kinder Morgan intrastate pipelines, KM Texas and KM Tejas, have converted a significant portion of their existing South Texas facilities from traditional dry-gas service to rich-gas service. Thus, dry-gas deliveries into these pipes upstream of their processing plants will probably be minimized.

Kinder Morgan advises that its ability to continue to provide gas-delivery service to markets will remain strong as it continues to receive dry-gas volumes and volumes from its Markham storage facilities.

Similarly, Trunkline Gas' South Texas interstate pipeline facilities upstream of Edna will also be converted to rich-gas service. Thus, dry-gas deliveries into these pipes in locations upstream of their processing plant arrangements will probably be minimized. With DCP Midstream contracting for the converted Trunkline capacity and operating its plants and its facilities on an integrated basis for rich-gas service, DCP plants, post-processing, should continue to make deliveries into other South Texas- connecting pipelines.

As is obvious from the many infrastructure actions, the South Texas liquids transportation and natural gas transportation grids have been transformed significantly by Eagle Ford production. Billions of dollars have been committed to new projects, and many existing facilities will see maximized use.

Although many midstream companies have announced a wide variety of solutions, more might be needed to ensure that the Eagle Ford shale reaches its full potential.