Following completion of its feasibility studies, Crosstex Energy LP said it will proceed with construction of its North Texas Pipeline project to bring natural gas out of the Barnett Shale and into markets in the Midwest and East. The project was first announced last December (see Daily GPI, Dec. 14, 2004).

The pipeline will come at an opportune time. The Railroad Commission of Texas announced this month that the Barnett Shale has become the largest gas producer in the state (see Daily GPI, Feb. 24).

“We are very excited to have the opportunity to build the needed additional pipeline capacity and provide market outlets for the rapidly growing Barnett Shale production,” said CEO Barry E. Davis. Referring to one of the largest Barnett producers, Davis said, “Chief Oil & Gas and other producers have done a great job in developing the largest gas field in Texas.”

Based on commitments from Chief Oil & Gas and other producers, Crosstex will begin the construction of a 122-mile, 24-inch diameter pipeline from a point just north of Fort Worth to interconnect with Natural Gas Pipeline Co. of America, Houston Pipeline Co. and Kinder Morgan Texas in Lamar County, TX. The pipeline will have initial capacity of 250 MMcf/d.

Crosstex is in discussion with companies that represent additional production, and with more volumes, compression could be added to expand the capacity up to a maximum of 375 MMcf/d, the company said.

Crosstex also has commitments from producers to construct an additional 11 miles of gathering pipeline to interconnect supply from the Tarrant County area into the North Texas Pipeline. The construction cost is estimated at $98 million and is expected to be completed by January 2006. Crosstex has begun the acquisition of rights-of-way and will initiate actual construction of the pipeline by late this summer.

“Crosstex’s North Texas Pipeline brings access to new market outlets from the Barnett Shale play, allowing Chief and other producers to focus on executing our exploration and development strategy,” said Trevor Rees-Jones, CEO of Chief Oil & Gas.

Crosstex, a midstream company headquartered in Dallas, operates more than 4,500 miles of pipeline, five processing plants and more than 50 gas amine treatment plants. It expects to fund initial construction expenditures for the project from its revolving bank facility. As the project progresses, the borrowings will be refinanced with a combination of equity and fixed-rate term debt.

©Copyright 2005Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.