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Chesapeake Signs With Eagle Ford Gathering JV

Eagle Ford Gathering LLC, a joint venture (JV) of Kinder Morgan Energy Partners LP and Copano Energy LLC said it will provide services in the Eagle Ford Shale play in South Texas to Chesapeake Energy Marketing Inc. a unit of Chesapeake Energy Corp.

Chesapeake is to "commit a significant quantity of natural gas production from multiple counties in South Texas over a 14-year term," Eagle Ford Gathering said. The JV will gather Chesapeake's gas from major delivery points and provide transportation, processing and fractionation services. Eagle Ford Gathering's previously announced 30-inch diameter pipeline in the western Eagle Ford is under construction and is expected to begin full service in the third quarter of 2011; however, some segments are expected to be available for service in the first half of the year, the JV said.

"Eagle Ford Gathering's agreement with Chesapeake fully subscribes the members' initial pipeline and processing capacity commitments of 375,000 MMBtu/d, representing a significant step in the JV's growth and in its ability to generate long-term, fee-based cash flows for the benefit of Copano's unitholders," said Copano CEO R. Bruce Northcutt. "We are currently working with Kinder Morgan to increase our respective pipeline and processing capacity commitments to 600,000 MMBtu/d, which will enable the JV to serve additional Eagle Ford Shale producers."

Kinder Morgan and Copano said they expect to invest about $175 million to construct 111 miles of pipeline facilities to serve Eagle Ford Shale production from Chesapeake and from SM Energy Co., with which the JV executed a gas services agreement last July (see Daily GPI, July 7).

Eagle Ford Gathering has 375,000 MMBtu/d of firm capacity on Kinder Morgan's intrastate pipeline from Laredo, TX, to Katy, TX, and 375,000 MMBtu/d of firm processing capacity at Copano's Houston Central processing plant. Copano is operator and managing member of Eagle Ford Gathering.

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