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Regency Expanding Eagle Ford Gathering System

Regency Energy Partners LP said it will spend about $450 million to construct a wellhead gathering system and other infrastructure in order to serve an undisclosed producer in the Eagle Ford Shale with gas and condensate gathering.

Known as the EF Expansion, the infrastructure will be owned and operated by Regency and will tie into its existing gathering system. Regency has also purchased existing midstream assets in the Eagle Ford that it will own and operate as part of the EF Expansion.

Once the project is finished, Regency's entire South Texas system will be capable of gathering, compressing, treating and transporting up to 1 Bcf/d of natural gas and 26,500 b/d of condensate to downstream outlets.

"The EF Expansion significantly broadens our South Texas gathering platform in the Eagle Ford Shale and positions Regency to offer similar services to other key producers in this prolific shale play," said Keith Crawford, Regency regional vice president. "The EF Expansion is fully contracted and underwritten by long-term, fee-based contracts with minimum volume commitments. In addition, the midstream assets purchased will provide immediate cash flow."

When fully developed, the EF Expansion will include:

Capital expenditures related to the EF Expansion are expected to be incurred primarily over the next three years and will initially be funded under a revolving credit facility. The project is scheduled for completion by 2014.

In December Regency announced a previous expansion of its South Texas system, which included 45 miles of pipeline looping (see Shale Daily, Dec. 15, 2010).

The rig count in the Eagle Ford has posted substantial gains from a year ago, climbing 110% to 166 last week, according to NGI's Shale Daily Unconventional Rig Count.

Regency also said Thursday it is expanding its Tilden Treating Facility to meet increasing producer demand in the Eagle Ford. Upon completion, the Tilden Expansion will provide an incremental 20 MMcf/d of treating capacity to the facility, which is in McMullen County, an area experiencing higher sour gas volumes associated with increasing Eagle Ford production, Regency said.

The Tilden Expansion is supported by long-term, fee-based volume commitments and allows Regency to utilize available capacity within its acid gas injection well, the partnership said. Capital expenditures related to the Tilden Expansion are included in the previously disclosed 2011 organic growth capital budget of $253 million. The Tilden Expansion is expected to be completed in the fourth quarter.

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