Kinder Morgan Energy Partners LP (KMP) said Monday that a $40 million project is underway to expand its Texas intrastate natural gas pipeline system into the Permian Basin by converting 254 miles of a previously acquired 24-inch diameter crude oil pipeline to natural gas service. The pipeline conversion will access several gas processing plants in West Texas, providing transportation service from McCamey, TX to just west of Texas’ rapidly growing capital city, Austin.

The project is in addition to and will complement the conversion of a 130-mile segment of the same crude oil pipeline between Katy and Austin, TX that began natural gas service in July 2004.

“The conversion project will provide Austin and other key central Texas markets with access to additional, attractively priced supplies of natural gas to help them meet the area’s growing demand,” said Tom Martin, president of KMP’s Texas Intrastate Pipeline Group. “Initial service on this portion of the conversion is expected to commence in October 2005, and the project is expected to be immediately accretive to earnings and cash flow at KMP.”

The project is supported by contracts with Baltimore-based Constellation Energy Commodities Group Inc., WTG Gas Marketing Inc., an affiliate of West Texas Gas Inc., based in Midland, TX, and other shippers. Approximately 95% of the 150 MMcf/d of new capacity being created by the conversion project is already under contract.

KMP’s 5,800-mile intrastate pipeline system links gas producing areas along the Gulf Coast and the rest of Texas, with approximately 5 Bcf/d of peak transportation capacity and about 120 Bcf of working gas storage capacity.

©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.