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Eagle Ford Driving Texas Midstream Expansions

Energy Transfer Partners LP said Thursday that new long-term fee based gathering, processing and liquids services agreements with Eagle Ford Shale producers support plans for it to further expand its previously announced Rich Eagle Ford Mainline (REM) pipeline and construct another cryogenic processing facility.

Also Thursday, Energy Transfer and Regency Energy Partners LP said their Lone Star NGL LLC joint venture would construct another fractionation facility at Mont Belvieu, TX.

Upon full completion, REM will consist of 257 miles of 30- and 42-inch diameter pipeline with capacity exceeding 1 Bcf/d. The initial phase, consisting of 160 miles of 30-inch diameter pipeline, was placed in service last October (see Shale Daily, April 25, 2011). The first expansion, 60 miles of 42-inch diameter pipeline, is scheduled for completion in the fourth quarter, and the second expansion, 37 miles of 30-inch diameter pipeline , is scheduled to be completed by the fourth quarter of 2013, Energy Transfer said.

The new processing plant, to be located in Karnes County, TX, will provide 200 MMcf/d of capacity and is necessary to fulfill the new long-term shipper commitments on REM. This plant, which is scheduled to be completed in the fourth quarter, and the previously announced Chisholm and Jackson County processing plants, will provide 1.125 Bcf/d of processing capacity, Energy Transfer said. The cost for the Karnes County plant and the REM expansion is estimated to be $210 million.

"This latest REM pipeline expansion and new processing plant exemplify the continued robust demand by our customers for additional infrastructure in the Eagle Ford Shale," said Energy Transfer's Brian Beebe, senior vice president. "Since October 2010, when we announced the construction of our Dos Hermanas rich gathering pipeline, we have seen ever-increasing demand by customers for takeaway solutions for their production.

"In addition to the Dos Hermanas pipeline, Energy Transfer has shown its commitment to meeting producers' needs in the Eagle Ford region by building the Chisholm and REM pipelines, and related plants/facilities, all supported by long-term fee-based contracts with total volume commitments now totaling more than 1.1 Bcf/d."

Separately, Lone Star is to construct a second 100,000 b/d natural gas liquids (NGL) fractionation facility at Mont Belvieu, TX. Supported by multiple long-term contracts, the second fractionator is necessary to handle the increasing NGL barrels delivered via the partnerships' Woodford Shale, Eagle Ford Shale and Permian Basin infrastructure, including Lone Star's 570-mile West Texas Gateway NGL Pipeline, the partners said.

Lone Star is on schedule to complete its West Texas Gateway NGL Pipeline and initial 100,000 b/d fractionator at Mont Belvieu in the first quarter of 2013 and expects the second fractionator to be completed in the first quarter of 2014 (see Shale Daily, June 23, 2011). At an estimated cost of $350 million, the project will also include interconnectivity infrastructure to provide NGL suppliers and NGL markets with access to storage, other fractionators, pipelines and multiple markets along the Texas and Louisiana Gulf Coast, Lone Star said.

"With the capacity of our first fractionator fully contracted, and increasing customer demand for NGL outlets, the addition of a second fractionator was necessary," said Lone Star's Greg Bowles, senior vice president. "Our two new fractionators and our West Texas Gateway system are all supported by long-term agreements."

The Eagle Ford Shale could arguably be called the hottest unconventional play in the country. According to NGI's Shale Daily Unconventional Rig Count, Eagle Ford rig activity shows the largest year-over-year growth. For the week ending Feb. 10, 230 rigs were actively drilling in the play, which marks a 61% increase over the 143 rigs operating one year ago.

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