Kinder Morgan Energy Partners LP said Monday it plans to build a $72 million intrastate pipeline to transport natural gas supplies out of the burgeoning East Texas production area to markets in the Houston and Beaumont region.

The project calls for the construction of 58 miles of 24-inch diameter pipe and multiple interconnections that would connect two existing Kinder Morgan intrastate pipelines -- the Kinder Morgan Tejas system in Houston County, TX, and the Kinder Morgan Texas system in Polk County in southeastern Texas. The new line would have an initial capacity of 225 MMcf/d using existing horsepower and is expandable to more than 400 MMcf/d with additional horsepower, according to Houston-based Kinder Morgan.

Kinder Morgan said it has entered into a long-term binding agreement with CenterPoint Energy Services Inc. to provide firm transportation for a significant portion of the initial project capacity.

"This project will more than double capacity on Kinder Morgan's intrastate pipeline system to move East Texas production to markets in Houston and Beaumont, and it is a good locational fit with the ongoing storage expansion at our North Dayton facility," said Tom Martin, president of the Texas Intrastate Pipeline Group.

"We see the need for the capacity due to the tremendous amount of drilling occurring along our system in East Texas, including initial testing of the deep Bossier play in Houston and surrounding counties."

Kinder Morgan's Texas intrastate system consists of approximately 6,000 miles of pipelines with a peak capacity of 5.2 Bcf/d. The system primarily serves the Texas Gulf Coast, including the Houston, Beaumont and Port Arthur, TX, markets.

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