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Bulls Keep Building in Barnett Shale

Evidence that the gas-rich Barnett Shale remains on the industry's front burner was easy to spot last week, as a new 42-inch diameter gas pipeline project was completed in the area by Energy Transfer Partners LP (ETP) and Crosstex Energy announced plans to build an $80 million natural gas processing facility.

ETP said its Southeast Bossier pipeline, a $468 million project consisting of more than 150 miles of pipeline from Farrar, TX to Silsbee, TX, is complete and serving producers in the Barnett Shale.

Southeast Bossier connects ETP's East Texas and Cleburne to Carthage pipelines with its Texoma Pipeline north of Beaumont, TX. The pipe serves producers in the Barnett Shale and Bossier Sand plays of Central and East Texas with up to 900,000 Mcf/d of initial capacity, which is fully subscribed, and will bring ETP's capacity from these producing basins to more than 4 Bcf/d.

Crosstex said it plans to build the 200 MMcf/d Bear Creek facility near its midstream assets in the Barnett Shale in Hood County, TX. The facility would increase the company's total processing capacity in the Barnett Shale to 485 MMcf/d. Crosstex said it expects the facility to become operational in the third quarter of 2009. Crosstex currently operates three gas processing plants -- the 200 MMcf/d Silver Creek cryogenic processing plant, the 55 MMcf/d Azle cryogenic processing plant and the 30 MMcf/d Goforth processing plant -- in the Barnett Shale region.

"The new Bear Creek facility will allow us to optimize the performance of our North Texas assets," said Crosstex CEO Barry E. Davis. "The fact that we are beginning to construct this new plant on the heels of starting up the Silver Creek processing plant in 2007 clearly shows that we expect our volumes in the Barnett Shale to grow substantially."

In addition to completing Southeast Bossier Pipeline, ETP has several other projects under construction that are expected to be in service throughout the remainder of 2008 and into 2009. One year ago ETP completed the final phase of its 42-inch diameter pipeline project to connect its 36-inch North Texas Pipeline, its Barnett Shale pipeline system and its Bethel Storage Facility to the Carthage Hub and other intrastate and interstate pipelines. At the time it said the Southeast Bossier project was to be completed in the first quarter of 2008.

This spring ETP announced the Texas Independence Pipeline, a $485 million, 42-inch diameter intrastate to serve the Bossier Sands and Barnett Shale resource plays of East Texas and north central Texas (see NGI, April 7). Those same plays inspired two other projects last fall (see NGI, Oct. 15, 2007).

How much more infrastructure development is in store for the region?

"Every time I answer that question, I say, yep, this is it, the last 42-inch we're going to build, Mike Howard, ETP COO for midstream operations, told NGI. "I've been wrong three or four times now. If you look at the production curve that the producers are talking about hitting in the [20]11-[20]12 years, versus the pipeline takeaway, I don't believe there's enough built. I don't think we've seen the end of projects yet. [Producers] continue to be very bullish on their production volumes."

ETP has pipeline operations in Arizona, Colorado, Louisiana, New Mexico and Utah, and owns the largest intrastate pipeline system in Texas.

Dallas-based Crosstex operates more than 5,000 miles of pipeline, 12 processing plants, four fractionators and approximately 190 natural gas amine-treating plants and dew point control plants. Crosstex currently provides services for more than 3.5 Bcf/d.

Last year Crosstex announced that it was building a 29-mile natural gas pipeline in the Dallas-Fort Worth, TX, area to provide greater takeaway capacity to gas producers in the prolific Barnett Shale formation (see NGI, Sept. 3, 2007). In 2006 Crosstex said it would expand its North Texas Pipeline to move gas from the Barnett Shale to the Perryville Hub in North Louisiana (see NGI, Nov. 20, 2006).

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