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Pipeline, Rail Projects Target Eagle Ford Crude

The pace of infrastructure development to serve producers in the Eagle Ford Shale in South Texas continues with two separate projects targeting services for crude oil and condensate.

Magellan Midstream Partners LP and M3 Midstream LLC are developing a 180-mile pipeline originating in LaSalle and Live Oak counties, TX, and terminating in Corpus Christi, TX, to carry crude oil and condensate from the Eagle Ford Shale to Magellan's existing distribution terminal in Corpus Christi.

The pipeline would have the capacity to supply more than 180,000 b/d of crude oil and condensate to Gulf Coast markets in Corpus Christi, Houston and Beaumont, TX, and St. James, LA.

"Together, we can provide Texas producers additional marketing flexibility to sell their products in the field or at downstream destination points to a variety of customers, offering a truly independent pipeline and storage choice," said Magellan CEO Mike Mears.

The project would include an expansion of crude oil and condensate storage at Magellan's terminal in Corpus Christi. Within the next few months, Magellan could initially offer a high-volume truck unloading facility and storage services for customers that wish to utilize truck delivery at the terminal and barge loading. Other truck unloading facilities would be added as needed to provide supply into the pipeline including one in Live Oak County. In addition, the project includes the potential construction of more than 1 million bbl of new storage at the Corpus Christi terminal for crude oil and condensate.

Design of the pipeline is nearing completion and pipeline construction and terminal modifications would take 14 to 18 months to complete, Magellan said. However, the partnership could offer interim storage services and barge loading within eight to 12 months to handle start-up pipeline shipments.

The construction of the pipeline and terminal projects are dependent upon the the success of commercial negotiations.

Separately, Watco Cos. LLC and Kinder Morgan Energy Partners LP plan to construct and operate several rail transload facilities to handle crude oil and energy-related products. They said the network would serve Dore and Stanley in North Dakota; Stroud, OK; Houston; and "several strategic loading facilities in the Eagle Ford Shale area in South Texas."

Each facility would have the capability of handling large unit train volumes along with manifest commodities such as sand for hydraulic fracturing, pipe and drilling supplies.

"Our new network of transloads, in partnership with Kinder Morgan, will add significant new services to the changing market dynamics and we believe will provide tremendous value for customers by improving the way they move energy-related commodities," said Kevin Goins, senior COO of Watco Transload and Intermodal. "We believe it will give our customers multiple options to ship by rail and provides them with a seamless solution from key production areas to key destinations."

The Dore facility would include Pioneer Oil LLC and would have more than10,000 feet of track in Phase I of the project along with warehousing for inside storage. The operational start date is slated to be Sept. 1. Stroud will also house the capabilities of handling unit train volumes with a start date of Oct. 1, and will provide customers direct access to Cushing, OK. "The other locations are still in the design phase and will be operational in the first quarter of 2012," the companies said.

Watco is based in Pittsburg, KS, and owns Watco Transportation Services LLC, which operates 22 short-line railroads on more than 3,500 miles of track as well as 23 industrial contract switching locations.

Last month Energy Transfer Partners LP announced plans for the Rich Eagle Ford Mainline (REM), which would have capacity of 400 MMcf/d, with the ability to expand to 800 MMcf/d. This rich gas gathering system, which is expected to be in service by 4Q2011, would originate in Dimmit County, TX, and extend to the partnership's Chisholm Pipeline for ultimate deliveries to the partnership's existing processing plants and to a new 120 MMcf/d processing plant (see Shale Daily, Feb. 22).

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