Shale Daily / NGI All News Access

Multi-Commodity Rail Line Planned for Permian Basin

Kinder Morgan Energy Partners LP (KMP) and Martin Midstream Partners LP have formed joint venture (JV) Pecos Valley Producer Services LLC to develop a multi-commodity rail terminal in Pecos, TX, to serve oil and gas producers in the Permian Basin of West Texas.

The facility is to be constructed and operated by a subsidiary of Watco Companies Inc., the largest privately held short line railroad company in the United States, according to the JV partners. KMP holds a preferred equity position in Watco.

The terminal will offer crude oil hauling, storage, transloading and marketing. It will also provide producers access to light Louisiana sweet crude oil markets. Kinder Morgan and Martin Midstream Partners will offer immediate natural gas liquids (NGL) storage, takeaway and fractionation services, and will seek to develop natural gas and crude gathering and processing systems within the area. The JV also has held initial discussions to develop a hydraulic fracturing sand unit train terminal to service Reeves County and surrounding counties.

"We believe this unique partnership will provide a wide range of services and expertise for the benefit of customers in Reeves County and surrounding areas, while expanding each company's footprint in this very active rich gas shale play," said Duane Kokinda, president of Kinder Morgan Texas Pipeline LLC.

The first stage of the terminal is expected to be completed and operational by May when crude oil, NGLs, frack sand, pipe, tube, structural steel, rig mats and other commodities can be railed in and out and transloaded to truck for delivery to the surrounding area. Once the terminal has been fully developed, it will encompass 85 acres and will be able to support unit trains. Total rail car capacity is anticipated to be 300-600 per day based on demand. The terminal is located along the Pecos Valley Southern Railway and adjacent to the Union Pacific mainline in the city of Pecos.

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