Eagle Ford generates another gathering, processing agreement

By OGJ editors
HOUSTON, Jan. 20
-- DCP Midstream LLC, Denver, reported signing a long-term gas gathering and processing agreement with a joint venture operating in the south-central Texas Eagle Ford shale gas play.

The joint venture consists of Pioneer Natural Resources USA Inc., Reliance Eagleford Upstream Holding LP, and Newpek LLC. The agreement covers gathering, processing, fractionation, and marketing of raw NGLs by DCP Midstream for the Pioneer JV’s production from more than 300,000 gross acres. In addition to the Pioneer JV acreage, DCP Midstream has in place a long-term gathering and processing agreement with an unnamed privately held producer for 33,000 acres of Eagle Ford development in Wilson and Karnes counties.

DCP Midstream will build about 130 miles of 16, 20, and 24-in. gathering pipelines that will connect the Pioneer JV companies and the unnamed producer’s central gathering points in south-central Texas and other gas supply to DCP Midstream’s existing area gathering and processing. In its announcement, DCP Midstream said it has excess processing capacity of 250 MMcfd available in the area.

Additionally, the company announced plans to build a sixth plant (Eagle gas plant) of 200 MMcfd capacity and related NGL infrastructure, which it expects to bring online in third-quarter 2012. These plans will increase DCP Midstream’s total capacity in the area to 1 bcfd. The company said it has purchased land and plant equipment and has received state regulatory permitting to begin construction.

The agreement announced today follows DCP Midstream’s recent announcement of the Trunkline Gas pipeline transaction, in which DCP Midstream will be the anchor shipper on Trunkline Gas’ 20-in. South Texas pipeline. The company is in the process of building large-diameter pipelines in the Eagle Ford shale to gather natural gas. This step will integrate DCP Midstream’s South and Central Texas area gathering systems with Trunkline Gas’s 165-mile South Texas system, the announcement said.

The enlarged system will “plumb together” DCP Midstream’s five existing processing plants with the new Eagle gas plant to create a system with more than 1 bcf/d of processing and associated fractionation capacities. DCP Midstream has executed long-term contracts with the Pioneer JV, ConocoPhillips, Petrohawk Energy, Enduring Resources, Murphy Oil, Riley Exploration, and others for gas production from more than 450,000 acres in the Eagle Ford shale area.

DCP Midstream, which operates in 18 states, is an equally owned joint venture of Spectra Energy and ConocoPhillips. The company owns the general partner of DCP Midstream Partners LP.

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