Kinder Morgan Energy Partners LP (KMP) and Phillips 66 on Thursday announced an agreement for Kinder Morgan to transport Eagle Ford crude and condensate to Phillips 66’s Sweeny Refinery in Brazoria County, TX, which will necessitate the construction of a $90 million, 27-mile, 12-inch diameter lateral pipeline to extend its Kinder Morgan Crude Condensate (KMCC) pipeline, along with related infrastructure.

Under the terms of the deal KMP will provide Phillips 66 with “a significant portion” of the lateral pipeline’s initial 30,000 b/d of capacity, which is expandable to 100,000 b/d.

Included in the $90 million investment, KMP will add associated receipt facilities by constructing a five-bay truck offloading facility and three new storage tanks with approximately 360,000 barrels of crude/condensate capacity at Kinder Morgan’s DeWitt Station in DeWitt County, TX, and Wharton Pump Station in Wharton County, TX.

Dependent on receiving the necessary environmental and regulatory approvals, the company said construction of the infrastructure is scheduled to begin in 4Q2012.

“This pipeline lateral will provide yet another attractive delivery point for customers of our KMCC pipeline while providing Phillips 66 with enhanced access to price-advantaged Eagle Ford crude and condensate,” said Tom Bannigan, president of KMP’s products pipelines business. He said the project is expected to be immediately accretive to cash available to KMP unitholders upon completion in 1Q2014.

KMP’s $215 million KMCC pipeline, which was ready for service in June 2012 (see Shale Daily, June 15), transports crude/condensate from the Eagle Ford shale to the Houston Ship Channel. The pipeline — supported by long-term commitments with a capacity of 300,000 b/d — is composed of 65 miles of new-build construction and 113 miles of converted natural gas pipeline, originating in the Eagle Ford Shale and delivering crude and condensate to terminaling facilities that provide access to refineries, petrochemical plants and docks on the Texas Gulf Coast. KMCC will also tie into Kinder Morgan’s planned petroleum condensate processing facility to be located near the company’s Galena Park, TX, terminal on the Houston Ship Channel (see Shale Daily, Dec. 15, 2011).

The Phillips 66 deal comes one month after KMP and BP North America struck agreements for KMP to provide BP with condensate processing services and storage at Kinder Morgan’s Galena Park terminal on the Houston Ship Channel (see Shale Daily, July 23). In the deal BP committed more than 40,000 b/d of throughput at KMP’s petroleum condensate facility, which will split condensate into various components such as light and heavy naphthas, kerosene and gas oil. The approximately $200 million facility has been designed to provide future processing expansions up to 100,000 b/d throughput. BP also will lease an additional 750,000 bbl of storage that KMP will add at its Galena Park terminal. The expansion is part of KMP’s $75 million investment to construct five tanks that will connect to its condensate facility with new piping, manifolds and pumps. The company expects the new storage tanks and condensate facility to be in service in the first quarter of 2014.