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Kinder's New Eagle Ford Crude Pipeline Enters Service

Kinder Morgan Energy Partners LP's (KMP) Crude/Condensate pipeline (KMCC) has entered service, carrying crude oil and condensate from the Eagle Ford Shale of South Texas to the Houston Ship Channel.

The $215 million pipeline is supported by long-term commitments and has a capacity of 300,000 b/d. It is composed of 65 miles of new-build construction and 113 miles of converted natural gas pipeline, originating in the Eagle Ford Shale and delivering crude and condensate to terminaling facilities that provide access to refineries, petrochemical plants and docks on the Texas Gulf Coast.

KMCC will also tie into Kinder Morgan's planned petroleum condensate processing facility to be located near the company's Galena Park, TX, terminal on the Houston Ship Channel (see Shale Daily, Dec. 15, 2011). The $200 million facility will have an initial throughput capacity of 50,000 b/d and is being supported by a fee-based contract with a major oil customer and can be expanded up to 100,000 b/d, KMP said. The project is in the final design phase and is expected to be in service by the first quarter of 2014.

The Eagle Ford Shale is unusual among shale plays in that it has distinct windows for dry gas, liquids-rich gas and oil. In the era of depressed prices for dry gas, producers have been flocking to the Eagle Ford's liquids-rich and oil windows. Matador Resources Co. is one example.

Last month Dallas-based Matador said it was moving forward with its plan to target the wet gas and oil-prone Eagle Ford while ramping down development of its dry gas Haynesville Shale acreage in North Louisiana (see Shale Daily, May 17).

Oil production from the Eagle Ford has skyrocketed, according to data compiled by the Railroad Commission of Texas (RRC). Last year more than 36.6 million bbl of oil were produced from the Eagle Ford, compared with 4.37 million in 2010. January through March 2012 has seen the production of nearly 17.6 million bbl, nearly half the total for all of 2011.

The Eagle Ford Shale has been one of the fastest growing unconventional plays over the last year, according to NGI's Shale Daily Unconventional Rig Count. For the week ending June 8, there were 249 rigs targeting oil and gas in the play, up 39% from the 179 rigs in operation one year ago.

Besides KMP, other midstream players have been following producers' lead in the liquids/oil dance. Regency Energy Partners LP recently said it would expand its Edwards Lime gathering joint venture in the South Texas play to increase the system's capacity by 90 MMcf/d to 160 MMcf/d, and provide for additional crude transportation and stabilization capacity of 17,000 b/d (see Shale Daily, May 15).

Kinder Morgan's other Eagle Ford assets include: Eagle Ford Gathering LLC, a joint venture with Copano Energy LLC that provides natural gas gathering, transportation, processing and fractionation services to various customers; EagleHawk Field Services LLC, a joint venture of Kinder Morgan Energy Partners (25%) and a subsidiary of BHP Billiton (75%) that owns, operates and is developing natural gas and condensate gathering facilities; and Camino Real Gathering System, which provides gas and oil gathering.

Including joint ventures and other projects, KMP's planned investments related to the Eagle Ford total more than $800 million.

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