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Enterprise Signs Up Chesapeake for Eagle Ford Services

Enterprise Products Partners LP has struck 10-year agreements to handle "a substantial portion" of Chesapeake Energy Corp.'s liquids-rich gas production in the Eagle Ford Shale in South Texas.

Chesapeake's gross acreage position comprises more than 625,000 acres in and around the oil and natural gas liquids (NGL)-rich areas of the Eagle Ford across Dimmit, LaSalle, McMullen, Webb and Zavala counties. Chesapeake has secured from Enterprise a package of midstream gas and NGL services, including firm commitments for gas transportation, processing and NGL transportation and fractionation.

Enterprise CEO Michael Creel said the deal represents one of the largest single-producer commitments for the partnership in the Eagle Ford Play. "The deal with Chesapeake marks the fifth major midstream transaction Enterprise has executed with Eagle Ford Shale producers in the past year..." he said.

Enterprise has previously struck long-term deals with producers Petrohawk Energy Corp., EOG Resources Inc. (see Daily GPI, Sept. 2), Anadarko Petroleum Corp. (see Daily GPI, Sept. 22) and Pioneer Natural Resources USA Inc. (see Shale Daily, Oct. 26).

Chesapeake's NGL-rich gas will initially be gathered and compressed by affiliate Chesapeake Midstream Development LLC for delivery to a central location. Enterprise will then transport and process the gas at its existing facilities while a new processing plant currently under development in Texas by Enterprise is completed. This cryogenic facility, expected to be completed early in 2012, is designed for an initial capacity of 600 MMcf/d and with an initial capability to extract as many as 75,000 b/d of NGLs.

The NGL production from Chesapeake's gas will ultimately be transported on Enterprise's previously announced 127-mile NGL pipeline that is planned to extend from the new gas processing plant to Enterprise's NGL fractionation complex in Mont Belvieu, TX. The new pipeline, also scheduled for completion in early 2012, is expected to have an initial capacity of more than 85,000 b/d and would be readily expandable to more than 120,000 b/d, Enterprise said.

Activity in the Eagle Ford Shale continues to increase as approximately 115 rigs working in the play have drilled more than 330 wells completed to date, Enterprise said. Total current production from the play is estimated at 425 MMcf/d of gas and 35,000 b/d of crude oil and condensate.

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