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Plains All American to Build Eagle Ford Processing Plant

Growing production from the Eagle Ford Shale in South Texas has prompted Plains All American Pipeline LP (PAA) to agree to build a new 130-mile crude oil and condensate pipeline, a marine terminal facility and 1.5 million bbl of storage capacity, the Houston-based partnership said Tuesday.

The $330 million project is designed to provide approximately 300,000 b/d of takeaway capacity from the western region of the Eagle Ford play to Corpus Christi, TX and other Gulf Coast markets, PAA said. The project is expected to be in service in the fourth quarter of 2012.

PAA has secured a long-term throughput agreement with Chesapeake Energy Marketing Inc. (CEM), a subsidiary of Chesapeake Energy Corp., and has agreed to provide Chesapeake Midstream Development LP the opportunity to acquire up to a 25% joint ownership interest in the project. PAA has also executed a memorandum of understanding with Flint Hills Resources for potential joint ownership of the project.

The PAA project joins a growing list of infrastructure projects targeting crude oil production from the Eagle Ford Shale. Earlier this month Enterprise Products Partners LP announced plans to build an 80-mile extension of its 350,000 b/d Eagle Ford crude oil pipeline, anchored by a 10-year agreement with CEM, which committed to 100,000 b/d of firm capacity (see Shale Daily, May 4).

In April Koch Pipeline Co. LP said it planned to build a crude oil pipeline from Pettus, TX, to Corpus Christi, and Genesis Energy LP began work to expand its crude oil pipeline and terminaling capabilities in the upper Texas coast (see Shale Daily, April 12). The completion of the Koch line is timed with affiliate Flint Hills Resources' updates to an Ingleside terminal that will have the capacity to ship up to 200,000 b/d of production via barge to other Gulf Coast markets.

In addition, NuStar Logistics LP and TexStar Midstream Services LP recently announced plans to develop a pipeline to carry Eagle Ford crude oil and condensate to Corpus Christi (see Shale Daily, April 7). Magellan Midstream Partners LP and M3 Midstream LLC have said they are developing a pipeline to carry crude oil and condensate from the Eagle Ford Shale to a distribution terminal in Corpus Christi; and Watco Cos. LLC and Kinder Morgan Energy Partners LP said they plan to construct and operate several rail transload facilities to handle crude oil and energy-related products in the region (see Shale Daily, March 8).

According to NGI's Shale Daily Unconventional Rig Count for the week ending May 13, Eagle Ford activity was up to 173 rigs, an increase of 122% compared with 78 rigs last year. Only the Bakken/Sanish/Three Forks play has more active rigs (175) than the Eagle Ford.

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