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Enterprise Inks Piceance Basin Gas Treating Pact with ExxonMobil

Enterprise Products Partners LP said Monday it signed a 30-year agreement to gather and process ExxonMobil's Piceance Basin natural gas production in Colorado. The fee-based contract requires Enterprise to invest about $185 million to build new gathering and treating facilities to compress and treat ExxonMobil's gas production, extract the natural gas liquids (NGL) and deliver the gas to interstate pipelines. Construction is expected to be completed in late 2008.

ExxonMobil's Piceance Basin development project encompasses more than 29,000 acres in Rio Blanco County, CO. All of the gas from these properties will be dedicated to the Enterprise facilities. The agreement includes an option for Enterprise to recover NGL beyond what's extracted to condition the gas to meet downstream pipeline specifications.

"As part of the services we are providing ExxonMobil under this agreement, Enterprise has the option to extract additional NGLs at its Meeker processing plant currently under construction in the Piceance Basin," said Enterprise CEO Robert G. Phillips. "The NGLs associated with this project will be transported to market through Enterprise's Mid-America Pipeline system, which is currently being expanded in the region."

Phillips noted that this project continues to expand Enterprise's already large midstream position in the region. "Our strategy in the Piceance Basin is to leverage the partnership's existing assets with additional facilities capable of supporting current and future natural gas development."

The company said in August it is planning to add more than 1.4 Bcf/d of gas processing capacity in the Piceance Basin and the Jonah and Pinedale fields in the Greater Green River Basin in Wyoming.

Current natural gas production from the Piceance Basin, which covers 6,000 square miles in northwest Colorado, is about 1 Bcf/d from roughly 4,800 wells. About 60 rigs are currently working in the basin where annual volume growth has averaged 25% over the past five years. An estimated 20 Tcf of reserves remain undeveloped.

In January, Enterprise entered into a long-term contract to process up to 1.3 Bcf/d of EnCana Oil and Gas (USA) Inc.'s Piceance Basin gas production (see Daily GPI, Jan. 27). Enterprise is currently constructing the Meeker cryogenic processing plant and associated facilities in Rio Blanco County at the terminus of EnCana's Piceance Basin gas gathering system and the beginning of the Rockies Express/Entrega Gas Pipeline system, which will transport the gas initially to the Cheyenne Hub in northern Colorado and eventually across the country to a terminus in eastern Ohio.

The Meeker facilities, which are expected to begin operations in mid-2007, will be capable of processing up to 750 MMcf/d. A Phase II expansion will add another 650 MMcf/d of processing capacity in 2008. Gas processed by the plant will be delivered through four major current and planned gas pipelines including Entrega, Wyoming Interstate, TransColorado and Questar. The plant will be capable of extracting 70,000 b/d of liquids.

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