Enterprise Products Partners LP agreed to provide a comprehensive long-term package of midstream energy services to EOG Resources Inc. for the Houston-based producer's growing natural gas and oil production in the Eagle Ford Shale in South Texas, the companies said Wednesday.
Enterprise operating subsidiaries would use existing assets and build new infrastructure to give EOG a "full range" of midstream services for its Eagle Ford operations, including natural gas transportation, treating and processing, as well as natural gas liquids (NGL) transportation and fractionation. In addition, Enterprise would provide EOG with crude oil transportation, storage and exchange.
EOG CEO Mark Papa, who is managing the company's transition from a gas-weighted independent, noted that the Eagle Ford "has the potential to be one of the largest crude oil discoveries in the United States, including the deepwater Gulf of Mexico, in the last 40 years, and we believe we have captured 900 million boe, net, on our 505,000 net acreage position in the play. Contracting with Enterprise, which brings a comprehensive program of midstream services, is a strategic move for EOG in marketing our production."
The NGL transportation and fractionation services that Enterprise is to provide for EOG are anchored by seven-year contracts. Enterprise plans to construct 52 miles of additional gas pipeline laterals to complement a previously announced Eagle Ford gas mainline project. Enterprise also would provide EOG with gas processing services at the partnership's planned cryogenic gas processing facility. With an initial capacity of 600 MMcf/d, the new processing plant is projected to be in service in mid-2012.
NGLs recovered from EOG's gas volumes at the new plant are to be transported through Enterprise's recently announced 127-mile, 12-inch diameter NGL pipeline to its Mont Belvieu,TX, complex where Enterprise will construct a fifth NGL fractionator. Before the new gas processing and NGL facilities are completed, Enterprise plans to use existing capacity in its integrated network of South Texas infrastructure to process EOG's gas and to transport and fractionate the NGLs recovered from EOG's natural gas production.
A 140-mile pipeline originating in northwestern Karnes County, TX, to transport crude oil production from the Eagle Ford Shale also is to be constructed by Enterprise. With a capacity of approximately 350,000 b/d, the pipeline would be large enough not only to meet EOG's requirements, but to accommodate other Eagle Ford producers, many of which are currently in discussions with Enterprise, the partnership said.
According to Enterprise, more than 90 rigs working in the Eagle Ford play have drilled more than 175 wells to date. Production in the play currently is estimated at around 300 MMcf/d of gas and 40,000 b/d of crude oil and condensate.
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