Energy Transfer Partners LP (ETP) said Thursday that it has made an agreement to provide natural gas gathering, processing and transportation services in the Woodford and Barnett shales for XTO Energy Inc., a subsidiary of ExxonMobil Corp.

Under the terms of the agreement, ETP is to construct the 117-mile Red River Gathering Pipeline (RRG), which would originate in Carter County, OK, and terminate at the Godley processing facility in Johnson County, TX, to connect the Woodford and Barnett shale plays. The partners would also build a new 200 MMcf/d cryogenic processing unit at the Godley plant.

RRG would be a 24- and 30-inch diameter pipeline with an initial capacity of 450 MMcf/d and with future expansions could exceed 550 MMcf/d. The pipeline is expected to be in service by 4Q2012. Meanwhile, the new cryogenic unit would increase Godley's processing capacity from 500 MMcf/d to 700 MMcf/d and is expected to be online by 3Q2013. The total cost for both projects is estimated to be about $360 million.

Terry Schultz, XTO's senior vice president for marketing, said the RRG "will provide XTO Energy the necessary infrastructure to operate effectively in the region, access markets beyond the region and help pave the way for additional job creation and economic growth in Southern Oklahoma."

ExxonMobil purchased XTO last year, and in June announced a nearly 70% increase in oil and gas reserves, to 76 Tcfe, and quarterly volumes that were 10% higher than the year before (see Shale Daily, July 29).