As gas production in the Piceance Basin continues to grow, Enterprise Products Partners LP partnership affiliates agreed with Chevron USA Inc. to provide a package of midstream services for Chevron's natural gas production in the northwest Colorado basin, the companies said last week.

Enterprise will gather gas originating from Chevron's 33,000-acre Western Slope development area in Garfield County, CO. The volumes will be transported through Enterprise's 48-mile, 36-inch diameter Piceance Creek Gathering System to the partnership's recently completed Meeker gas processing facility. The first phase of the Meeker complex, which was placed into service in October (see NGI, Oct. 22), is designed to process up to 750 MMcf/d and has the capability to extract as much as 35,000 b/d of natural gas liquids (NGLs). Phase II, which will double capacity of the facility to 1.5 Bcf/d and 70,000 b/d of NGLs, is projected to begin operations in summer 2008.

Initial volumes from Chevron's Piceance production are estimated to be 50 MMcf/d beginning in 2008. "Our drilling program is progressing well, and we are on track with the installation of key facilities needed to bring our gas to market," said Scott Davis, vice president of Chevron's MidContinent/Alaska business unit.

Chevron began its drilling program in the Piceance Basin with a 13-well delineation program in 2005 on 33,000 acres that it owns on Colorado's Western Slope. Two purpose-built rigs began drilling the first development wells this summer, using extended-reach directional drilling techniques that will allow Chevron to complete up to 22 wells from a single pad. The entire development program may involve more than 2,000 wells and could last 10 to 15 years, with production operations continuing for several decades, the company said.

Under the terms of a separate transportation and fractionation exchange agreement with Chevron, Enterprise will receive Chevron's mixed NGLs extracted at Meeker and utilize its integrated midstream network, which includes the Mid-America Pipeline (MAPL), to provide purity products to Chevron. During the third quarter of 2007, Enterprise completed an expansion of MAPL that added 50,000 b/c of incremental capacity to accommodate growing NGL production from the Rocky Mountain region.

"This agreement strengthens our position as a premier player in the thriving Piceance Basin and illustrates how producers have come to recognize the importance of our Rockies infrastructure and our integrated assets farther downstream as they continue to develop one of the nation's most prolific energy producing regions," said Enterprise CEO Michael A. Creel.

Enterprise has executed agreements with half of the 12 largest producers in the Piceance Basin region, whose production totals more than 2 Bcf/d of gas, and expects to enter into additional agreements with other Piceance Basin producers soon, the company said.

In August, Questar Pipeline Co. and an Enterprise affiliate entered into a memorandum of understanding to develop the White River Hub, which would be a header system connecting Enterprise's Meeker complex with up to six interstate pipelines in the Piceance Basin area, including Questar Pipeline (see NGI, Sept. 3).

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