Louisiana chalk gas play to get another pipeline

Proposed Chalk Gas System [27853 bytes]

Louisiana's Austin chalk gas play is gathering speed with the third disclosure in a month of plans to build pipeline and processing facilities.

Mitchell Energy & Development Corp., The Woodlands, Tex., and Chesapeake Energy Corp., Oklahoma City, have agreed in principle to construct a 40 mile, 20 in. gas pipeline and 40 miles of associated gathering lines in south-central Louisiana.

The Louisiana Chalk Gathering System will move gas from Chesapeake's Cretaceous Austin chalk wells in the Masters Creek area-including the Louisiana parishes of Rapides, Allen, Evangeline, Avoyelles, and St. Landry-to Eunice gas processing plant in Acadia Parish operated by Enron Louisiana Energy Co.

Mitchell and Chesapeake expect to complete the first segment of gas pipeline by yearend 1996 and the entire 250 MMcfd system by spring 1997. First phase pipeline and gathering facilities are expected to cost about $25 million. Cost of facilties to be built after this year will depend on production volumes ultimately to be handled in the area.

In a related deal, Chesapeake and Enron agreed to expand the Eunice plant to accommodate the new supply of Chesapeake gas.

The announcements follow closely plans disclosed last month by:

Units of El Paso Energy Corp. and Tenneco Energy to build a 100 MMcfd gas plant and associated natural gas liquids (NGL) pipelines for Oxy U.S.A. Inc. chalk wells in the Masters Creek area (OGJ, Aug. 12, p. 33).
ARCO Pipe Line Co., Houston, and Union Pacific Resources Group Inc., Dallas, to form a 50-50 joint venture (JV) to build and operate an NGL pipeline system and 100 MMcfd gas plant, also at Masters Creek (OGJ, Aug. 19, p. 30).

Pipeline, gas plant details

Chesapeake and Mitchell plan to construct the Louisiana Chalk gas pipelines through a 50-50 JV. Mitchell is to be the operating partner.

In addition to taking gas from Chesapeake wells, the completed pipeline will have sufficient capacity to move gas from third-party producers in the five-parish area.

An official of Enron Liquid Services said the company immediately will begin debottlenecking the Eunice gas plant and fractionator in preparation for Chesapeake gas.

Enron expects a large volume of NGL to be recovered from the gas stream. Together with the new pipeline facilities, Enron said, the Eunice plant is ideally positioned to become a key link in the rapidly expanding Louisiana chalk play.

Chesapeake Chief Executive Officer Aubrey K. McClendon said the Louisiana Chalk gas system will serve a big part of the company's 400,000 acre Masters Creek and St. Landry leasehold.

Chesapeake holds 1 million net acres in the Louisiana Austin chalk trend, has six rigs running in the area, and plans to significantly increase drilling activity in the play this year and in 1997.

Mitchell last year built and now operates a similar gathering and large-diameter gas pipeline system in the Austin chalk area of central Texas.

Allen Tarbutton, president of Mitchell Gas Services, said the Louisiana chalk gas pipeline system will provide much needed infrastructure gas from the Austin chalk and other formations in the area to gas and NGL outlets in the Eunice area.