Teak Midstream LLC is building more than 200 miles of natural gas gathering and residue delivery pipelines and an adjoining 200 MMcf/d cryogenic gas processing plant in South Texas to better serve producers operating in the Eagle Ford Shale, the Dallas-based company said Tuesday.
Construction of the $280 million project is supported by 10-year firm gathering and processing agreements with Talisman Energy USA Inc. and Statoil Natural Gas LLC, Teak said. The facilities are scheduled to be operational in 3Q2012.
"Our new assets, which will be complementary to our 325-mile Texana gathering system in South and East Texas, will expand our footprint in South Texas and provide us with an ideal growth platform," said Teak Co-CEO A. Chris Aulds. "The project greatly enhances our gathering and processing capabilities and raises our customer service to a new level as we help producers move their gas and NGLs [natural gas liquids] to market."
The project includes two separate high-pressure gas gathering systems; a 125-mile long, 24-inch diameter pipeline with a capacity of approximately 600 MMcf/d, and a 20-mile long, 20-inch diameter pipeline with a capacity of approximately 400 MMcf/d.
The 125-mile system will originate on acreage in La Salle County, TX, jointly owned by Talisman and Statoil, and will move rich gas production to Teak's new Silver Oak gas processing plant, which is under construction in Bee County, TX. Teak would own the first 50-mile segment of the system -- the La Salle Lateral -- and would jointly own the remaining 75-mile segment -- the Bee Express -- with TexStar Midstream.
The smaller pipeline, named the Karnes Lateral, would move rich gas production from Karnes County, TX, to the Silver Oak processing plant, and would be owned by Teak.
The project also includes the construction of approximately 51 miles of 20-inch diameter residue gas pipeline that will deliver dry gas from the Silver Oak Plant. Plans call for the pipeline to connect with Tennessee Gas Pipeline, Texas Eastern, Transcontinental Gas Pipe Line and NGPL, and to cross several other interstate and intrastate pipelines. Teak said it would also construct about three miles of 12-inch diameter NGL pipeline to transport liquids recovered at the processing plant to the DCP Sand Hills NGL pipeline.
Talisman and Statoil are also supporting through long-term customer commitments a recently announced project by Copano Energy LLC and Magellan Midstream Partners LP to deliver Eagle Ford Shale condensate to Corpus Christi, TX (see Shale Daily, Dec. 22, 2011). The initial capacity of that pipeline is to be 100,000 b/d.
Calgary-based Talisman recently said stubbornly low natural gas prices have prompted it to shift its focus to liquids (see Shale Daily, Jan. 11). The company plans to spend $500 million in the Eagle Ford this year, up from $350 million in 2011, and it expects to bring four additional rigs into the play this year, increasing its total to 14.
Talisman and Statoil formed a joint venture to acquire acreage in the Eagle Ford in 2010 (see Shale Daily, Oct. 12, 2010).
Increasing infrastructure is necessary to keep up with growing development and production in the play. The Eagle Ford Shale could arguably be called the hottest unconventional play in the country right now. 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. 17, 231 rigs were actively drilling in the play, which marks a 57% increase over the 147 rigs operating one year ago.