Eagle Ford shale prompts more midstream service agreements

By OGJ editors
HOUSTON, Oct. 25
-- Eagle Ford shale activity in South Texas continues to spawn processing and transportation agreements.

One of the latest is from Enterprise Products Partners LP, which today said subsidiaries have signed 10-year agreements with Pioneer Natural Resources USA Inc., Reliance Eagleford Upstream Holding LP, and Newpek LLC to handle liquids-rich natural gas and crude oil production from the Pioneer’s acreage in the Eagle Ford shale.

The agreements cover much of the Pioneer's expected production, including commitments for firm natural gas transportation, natural gas processing, NGL fractionation and transportation, and crude oil marketing.

Enterprise said Pioneer's NGL-rich gas will be processed initially in Enterprise's existing Gulf Coast plants until early 2012 when it can be processed at Enterprise's previously announced gas plant under construction in Lavaca County in South Texas (OGJ, Sept. 27, 2010, Newsletter). This cryogenic plant will initially be able to handle 600 MMcfd and extract as much as 60,000 b/d of NGLs.

Pioneer's NGL production will ultimately move on Enterprise's new 127-mile NGL pipeline from the new gas plant to Enterprise's Mont Belvieu, Tex., complex east of Houston. The new NGL pipeline will have initial capacity of more than 60,000 b/d, which Enterprise said can be expanded to more than 120,000 b/d and is also set for completion in early 2012.

To accommodate the additional NGLs, Enterprise has announced construction of a fifth, 75,000-b/d NGL fractionation train at Mont Belvieu to be in service in early 2012. In addition, Enterprise's fourth NGL fractionation train, which also can handle 75,000 b/d, is to begin operating by yearend. Addition of these two new fractionation units will increase Enterprise's total NGL fractionation capacity at Mont Belvieu to about 380,000 b/d, said the company.

As part of the crude oil agreements, Enterprise will build about 100 miles of supply laterals that will deliver crude oil produced by Pioneer into the new 140-mile pipeline Enterprise announced earlier this year (OGJ Online, Sept. 1, 2010).

Pioneer's producing area in the Eagle Ford shale currently covers more than 300,000 gross acres in McMullen, Atascosa, Live Oak, Bee, Karnes, and DeWitt counties, said the Enterprise announcement.

The gathering lines required to link production to midstream processing and transportation will be provided by EFS Midstream LLC, a joint venture of Pioneer and Reliance. The agreements with Pioneer and its joint-venture partners marks the fourth major midstream deal Enterprise has executed with Eagle Ford producers in the past year, said the company.

It said more about 100 rigs are working in the Eagle Ford shale, drilling nearly 175 wells. Current production from the play is about 300 MMcfd and 40,000 b/d of crude oil and condensate.

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