Howard Midstream Energy Partners LLC (HEP) will construct a cryogenic natural gas plant capable of processing 200 MMcf/d in the heart of the Eagle Ford Shale in Webb County, TX, the San Antonio, TX-based company said Wednesday.
The plant and an import and export logistics railroad hub for oilfield-related services and products, including condensate and natural gas liquids (NGL), is to serve primarily producer and midstream customers operating in the Eagle Ford, Olmos and Escondido plays in South Texas. The total cost of the projects is about $100 million, HEP said.
"We currently operate approximately 500 miles of pipeline in the western Eagle Ford, delivering lean natural gas into domestic markets and Mexico, and gathering rich natural gas for processing," said Howard Energy CEO Mike Howard. "As we continue to grow our business, we anticipate extending our midstream services into other plays and geographic areas when the time is right."
HEP's Reveille cryogenic processing plant and associated pipelines would tie into the Cuervo Creek gathering pipeline system, which HEP acquired last year (see Shale Daily, March 16, 2012). Construction is scheduled to begin in April with start-up anticipated next January.
HEP said it has signed long-term gathering and processing contracts with Escondido Resources II and Laredo Energy that support building the Reveille plant. The agreements add to HEP's guaranteed minimum throughput of natural gas fee-based commitments to their system, bringing the total to more than 350 Bcf. The company "is aggressively seeking additional customers for the plant," HEP said.
Laredo Energy was one of the previous owners of the Eagle Ford Escondido Gathering System, which HEP acquired in 2012. The Cuervo Creek and Escondido gathering systems are primarily 12-to-16-inch diameter high-pressure gas pipelines.
Midland, TX-based Escondido Resources in September said its Spohn Ranch 1H well in the Hawkville Field in Webb County was the highest-producing natural gas well to date in the Eagle Ford, and it said it was having success in the shallower Escondido and Olmos formations (see Shale Daily, Sept. 21, 2012).
The industrial logistics railroad hub, which is being constructed on 260 acres in Live Oak County, TX, would be capable of handling manifest and unit trains transporting multiple types of cargo, including crude oil, condensate, NGL, water, pipe and sand used in the hydraulic fracturing process, HEP said. The hub is expected to be ready to accommodate manifest trains in May. It would access the Union Pacific Railroad that runs from San Antonio to Corpus Christi, TX, as well as numerous pipelines in the area that will transport oil and condensate. HEP is actively seeking third party tenants that can use the facility for Eagle Ford or other industrial related products and services.
There were 228 rigs operating in the Eagle Ford at the beginning of February, a decline of three rigs from the week before and just one fewer than a year ago, according to NGI's Shale Daily Unconventional Rig Count. There continue to be more rigs in the Eagle Ford than any other of the nation's unconventional plays.