P?roduction in the shale plays has ratcheted up and rig counts are continuing to rise as well, providing ample demand for additional midstream infrastructure. The majority of recent midstream projects involve expansions to increase much-needed capacity. Those announced most recently target the Eagle Ford and Woodford shale plays.
This month’s selected projects constitute some 397,500 barrels and 370 million cubic feet per day of added pipeline capacity. Also, new storage construction will contribute some 750,000 barrels and 11 billion cubic feet of additional capacity.
Included in this spate of new projects is a pipeline planned by Magellan Midstream Partners LP and M3 Midstream LLC (Momentum). The companies plan to build a 180-mile line originating in LaSalle and Live Oak counties, Texas, and terminating in Corpus Christi, Texas. The proposed pipeline system will deliver crude oil and condensate from the Eagle Ford shale formation to Magellan’s existing distribution terminal in Corpus Christi.
The system would be able to supply more than 180,000 barrels of crude oil and condensate per day to Gulf Coast markets in Corpus Christi, Houston and Beaumont, Texas, and St. James, Louisiana. And the project includes potential construction of more than 1 million barrels of new storage at Magellan’s Corpus Christi terminal for crude oil and condensate.
In other news, Southcross Energy GP LLC entered into long-term agreements with Swift Energy Co. to provide natural gas gathering, transportation and processing services for production from Swift Energy’s acreage in McMullen County, Texas. Southcross will construct a 25-mile, 20-inch natural gas pipeline with related lateral gathering lines and convert an existing dry pipeline system to rich-gas service to gather the Swift Energy production for processing.
The system, which is expected to be in service in mid-2011, will originate in McMullen County, Texas, and extend to Southcross’ CCNG Transmission pipeline for gas delivery to and processing at Southcross’ processing plant near Gregory, Texas.
Also, Kinder Morgan Energy Partners LP (KMP) has formed a crude-oil joint venture with Deeprock Energy Resources LLC and Mercuria Energy Trading Inc. in Cushing, Oklahoma. KMP is investing some $25 million for a 50% stake in an existing crude-oil tank farm with storage capacity of up to 1 million barrels and for construction of three new storage tanks with incremental capacity of 750,000 barrels.
Deeprock will remain construction manager and continue to operate the terminal. Mercuria will continue as anchor tenant for this capacity for the next five years, with an option to extend.
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