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Backed By Devon, Enterprise and Boardwalk Build More Barnett Pipe

Boardwalk Pipeline Partners on Friday announced plans to build a new interstate natural gas pipeline to accommodate the growing Barnett Shale production. The new pipe will begin in North Texas near Sherman, and proceed to the Perryville, LA, area. The 355-mile 42-inch pipeline will have a design capacity of 1.5 Bcf/d.

Boardwalk's Gulf Crossing Pipeline is supported by binding agreements with affiliates of Devon Energy Corp., the largest Barnett Shale producer, and Enterprise Products Partners LP to transport 850 MMcf/d, with options for an additional 350 MMcf/d of capacity. The terms of the agreements have a weighted average life of approximately 10 years.

Terrence Ruder, general manager of Devon's Marketing & Midstream Division, said the project "will provide a secure outlet to an expanding market area for Devon's growing natural gas production in the Texas Barnett Shale and Oklahoma Woodford Shale plays."

A binding open season will be conducted to solicit incremental commitments for the remaining capacity. The pipeline is projected to cost $1.1 billion and be in service during the fourth quarter of 2008, subject to regulatory approval. Enterprise also has the option to acquire up to a 49% interest in the Gulf Crossing project, subject to certain conditions.

Enterprise affiliate Enterprise Texas Pipeline LP will extend its intrastate natural gas pipeline system with the construction of a new 178-mile pipeline as part of the project. The $400 million Enterprise Sherman Extension, comprised of 30- and 36-inch diameter pipe, extends through the center of the current Barnett Shale development and will make deliveries into the Gulf Crossing project.

"With production expected to nearly double over the next six years, the Barnett Shale play represents one of the most prolific natural gas development areas in the country," said Enterprise CEO Robert G. Phillips. "Current pipeline capacity in the region is not sufficient to accommodate this growth, creating an outstanding opportunity for Enterprise to combine elements of its North Texas midstream infrastructure with the new Sherman Extension project to provide a comprehensive export solution for producers and gatherers from this region.

"Further," said Phillips, "Enterprise views this project as an important expansion of our existing Texas intrastate system, providing Enterprise with the additional flexibility to transport growing volumes from the East Texas Bossier Trend and as far away as the Waha area of the Permian Basin to price-competitive markets in the eastern U.S."

In addition to volumes from the Barnett Shale region, the Sherman Extension will allow Enterprise to provide 200 MMcf/d from the Waha area in West Texas to Morgan Mill. The project will also make 400 MMcf/d of capacity from East Texas available on Enterprise's existing 36-inch intrastate pipeline.

The pipeline project is one of several proposed to increase gas supplies coming from the North Texas region. In October, the Federal Energy Regulatory Commission issued CenterPoint Energy Gas Transmission (CEGT) a certificate to build a 172-mile pipeline from the Carthage Hub in Texas to the Perryville Hub (see Daily GPI, Oct. 4). The proposed 42-inch diameter pipe would deliver up to 1.24 Bcf/d of supply from three receipt points connected to Texas intrastate pipelines in the Carthage Hub in Carthage, TX, to four interstate pipelines that are interconnected to CEGT's Perryville Hub in Delhi, LA.

In September, Energy Transfer Partners LP announced a 36-inch pipeline expansion connecting the Barnett Shale to the company's 30-inch Texoma pipeline (see Daily GPI, Sept. 21).

Boardwalk subsidiary Gulf South Pipeline confirmed it is proceeding with its previously announced Southeast Expansion Project, which will expand its system from near Harrisville, MS, to an interconnect with Transcontinental Gas Pipe Line Corp. (Transco) in Choctaw County, AL. As part of the Gulf Crossing Expansion Project, Gulf South will lease capacity to Gulf Crossing from the Perryville area to the new Transco interconnect.

The Southeast Expansion will consist of 116 miles of 42-inch pipeline, with an initial design capacity of 1.2 Bcf/d. The cost of the initial expansion is expected to be $330 million, with service during the first quarter of 2008, subject to regulatory approval. Based upon the outcome of the open season and whether the capacity options are exercised by the foundation shippers on the Gulf Crossing Pipeline, Gulf South is prepared to add additional facilities to meet market demand which are estimated to cost up to $300 million.

Last Wednesday, Boardwalk subsidiary Texas Gas Transmission LLC announced a third expansion of its gas storage operations to add 113,900 MMBtu/d of deliverability and 10.25 trillion Btu of working gas capacity to its total storage operations, which includes nine fields in Indiana and Kentucky (see Daily GPI, Nov. 9). The expansion is designed to accommodate additional supply coming in from the Rockies Express pipeline and from the Midcontinent and Canada.

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