Buckeye Partners Closes Deal for Eagle Ford Assets

Closing Price: $860-Million
Trafigura Terminals Eagle Ford Port in Corpus Christi

Trafigura Terminals’ Eagle Ford Port in Corpus Christi | Click to Enlarge

Buckeye Partners, L.P. has closed its $860-million transaction with Trafigura AG’s South Texas Eagle Ford midstream assets.

The transaction creates a new joint venture – Buckeye Texas Partners. The new company will own and operate the divested Trafigura assets, but Trafigura will retain a 20% interest and have joint ownership of the new company. Both companies announced the acquisition and divestiture agreement earlier this month.

Read more: Buckeye Buys Eagle Ford Facilities – $860 Million

Buckeye Texas Partners will invest appoximately $240-million – $270-million on improvements to the system, increasing its liquid petroleum products storage capacity to 5.6-million barrels. A 50,000 barrel per day condensate splitter is currently under construction and is anticipated to be completed by mid-2015.

Buckeye Partners CEO Clark Smith, said in a prepared statement, “once the initial phase of expansion is complete, these assets will form an integrated system with connectivity from the production in the field to the marine terminal infrastructure in Corpus Christi, creating a logistics platform with significant flexibility and optionality.”

Read more at buckeye.com

EPA Grants Permit for $500 Million Corpus Christi Condensate Splitter

Project Expected to Cost $500 Million
Oil Tanker Leaving Port of Corpus Christi

Empty Oil Tanker Leaving Port of Corpus Christi – Click to Enlarge

The Environmental Protection Agency (EPA) has given a subsidiary of Conneticut-based Castleton Commodities International the green light for the construction of new petroleum process facilities near Corpus Christi, TX. The EPA issued the final greenhouse gas and prevention of significant deterioration construction permit to the subsidiary, CCI Corpus Christi, LLC, on Sept. 15th.

The company plans to build two fractionation units, capable of producing a combined 100,000 b/d and a bulk petroleum terminal. The terminal will include storage tanks and barge loading operations that can handle 500,000 barrels a day of crude condensate for export.

Castleton hopes to get some skin in the condensate export game, according to the EPA, but will need additional approval from the federal government. So far, only two companies, Pioneer Natural Resources Co. and Enterprise Product Partners LP, have been authorized to export minimally processed condensate from the Eagle Ford Shale. More than half of all production from play is condensate, which is an ultralight crude oil.

Read more: Oil Exports to Foreign Buyers Begins

In addition to exporting product, Castleton also plans to use the crude condensate to produce diesel, jet fuel, naphtha, and other petroleum products. The project is expected to cost the company $500-million.

Read more at epa.gov

 

 

Buckeye Buys Eagle Ford Facilities – $860 Million

$240 - $270 Million Slate for Improvements Through 2016
Trafigura Eagle Ford Assets

Trafigura Eagle Ford Assets

Buckeye Partners, L.P. announced this week it will acquire an 80% interest in Trafigura AG’s South Texas Eagle Ford midstream assets for $860-million. The deal creates a new joint venture, whereby Trafigura will retain a 20% interest in its assets and jointly own the new company, Buckeye Texas Partners, that will own and operate the assets divested by Trafigura.

In the deal, Buckeye gains a deep-water, high volume marine terminal located on the Corpus Christi Ship Channel, a condensate splitter and LPG storage complex in Corpus Christi, and three crude oil and condensate gathering facilities in the Eagle Ford shale. All of the assets are supported by 7- to 10-year minimum volume throughput, storage and tolling agreements with Trafigura.

Buckeye CEO Clark Smith, said, “we are excited about the opportunity to partner with Trafigura and to position ourselves with them in the rapidly growing Corpus Christi and Eagle Ford markets,” stated Mr. Smith. “We believe this strategic partnership will provide significant opportunities for additional infrastructure expansion to support further expected growth in these markets.”

Buckeye Texas Partners will invest appoximately $240-million – $270-million on improvements to the system, increasing its liquid petroleum products storage capacity to 5.6-million barrels. A 50,000 barrel per day condensate splitter is currently under construction and is anticipated to be completed by mid-2015.

Read more at buckeye.com

TPA: Pipeline Industry Has Positive Economic Impact on Texas

Eagle Ford Midstream Activity Going Strong in 2014
Pipeline Photo

Pipeline Being Laid | Click to Enlarge

As development continues to grow in the Eagle Ford Shale and in West Texas’ Permian Basin, the need for additional midstream infrastructure has also grown. Not surprisingly, the pipeline industry has benefited in conjunction with the boom, and according to a new study, Texas and its’ people have as well.

In a recently released Texas Tech University study, commissioned by the Texas Pipeline Association (TPA), the state’s oil and gas pipeline industry purportedly provided $33-billion in overall economic impact, and supported more than 165,000 jobs in 2013. During the same time frame, the study claims industry provided for $18.7-billion in gross state revenue, and injected $1.6-billion in state and local revenue taxes.

“Due to a dramatic increase in the state’s oil and gas production, the demand for additional pipelines is expected to continually increase in the coming years. The communities that are home to pipeline projects are perfectly poised to see economic benefit from the industry in terms of more jobs and increased tax revenues,” said TPA President Thure Cannon.

According to the study’s conservative estimates, pipeline operations and construction will contribute $374-billion in total economic output, and sustain 171,000 jobs annually for the next decade. During the same time frame, the study estimates $212-billion in additional gross state product and $19.5-billion in state and local government revenues.

Eagle Ford Midstream Activity

During 2014, several midstream/pipeline projects have been announced for the Eagle Ford. See below for links to recent stories:

Devon Subsidiary Constructing New Eagle Ford Oil Pipeline

Ultimate Capacity of 100,000 b/d
Victoria Express Pipeline

Victoria Express Pipeline |Click to Enlarge

Victoria Express Pipeline LLC (VEX), a subsidiary of Devon Energy, is constructing a 56.4 mile long pipeline from the Blackhawk central delivery point in DeWitt County, Texas to the inlet of Devon Gas Services’s terminal at the Port of Victoria. The 12-inch pipeline is expected to come online July 1, 2014, with an ultimate capacity of 100,000 b/d.

In late 2013, Devon Energy agreed to pay GeoSouthern $6-billion for 82,000 net acres in the Eagle Ford Shale play. In the first quarter of 2014, the company said its net daily production in the Eagle Ford was 64,000 boe/d. In the second quarter, the company anticipates it will average between 65,000 and 70,000 boe/d, with more than 100,000 boe/d by next year.

Eagle Ford producers need to continuously think about how they will get their production to the refining market as activity in the play continues to grow. Wood Mackenzie recently released information stating production from the Eagle Ford Shale will reach 2-million b/d by 2020.

Read more: Devon Banking on High Returns from Eagle Ford Investment

VEX is currently conducting a binding open season to attract companies for long term commitments in exchange for access to priority capacity. The open season will end on June 19, 2014.

VEX is also constructing an additional receipt point eight miles north of Victoria in Victoria County, Texas. The company may add an additional destination point at Point Comfort in Calhoun County, Texas.

Koch Expands its Eagle Ford Crude Oil Pipeline System

New Pipeline Will Have Expected Initial Capacity of Approximately 200,000 b/d
Pipeline Photo

Pipeline Being Laid | Click to Enlarge

In May of 2014, Koch Pipeline Company announced it will expand its Eagle Ford crude oil pipeline system. The installation includes an additional 24-mile, 16-inch pipeline in San Patricio County, which is located near the Texas Gulf Coast, next to Corpus Christi, TX. Company officials say the new pipeline will have an expected initial capacity of approximately 200,000 b/d.

“We are seeing additional opportunities with the Eagle Ford shale play and this new pipeline will help us move domestic crude to the U.S. market more efficiently by using a combination of new and existing pipeline infrastructure,” said Bob O’Hair, EVP of Koch Pipeline. “South Texas is an important area for Koch Pipeline and we’ll continue to invest in it to ensure we have a system that meets the shippers’ needs in terms of capacity and reliability.”

In 2012, the company completed a 20-inch crude oil pipeline between Pettus, TX in Bee County and Corpus Christi, TX. The installation at its onset transported approximately 250,000 b/d of Karnes County area Eagle Ford production.

Read more: Koch Eagle Ford Shale Pipeline Going Forward

Koch’s Proposed Bakken Shale Pipeline Cancelled

Koch, which has both Northern and Southern operations, recently attempted to gain a foothold in another major play, but was unsuccessful. In January of 2014, the company withdrew its proposal to build a 250,000 b/d crude oil pipeline in the Bakken Shale, in North Dakota, after not being able to secure enough commitments. The cancellation of this pipeline was surprising because more than 500,000 b/d currently moves out of the Bakken area  by rail.

Read more: Koch Cancels Proposed Bakken Pipeline – “Dakota Express Pipeline”

The company currently operates a 304-mile pipeline owned by Minnesota Pipe Line Company, LLC that delivers Canadian and Rockies crude oil, including Bakken, from Clearbrook, Minn., to refineries in the Twin Cities. In Texas, Koch operates about 540 miles of active crude oil transportation lines. The new Eagle Ford crude oil pipeline expansion is expected to come online in the second quarter of 2014.

Read more at kochpipeline.com

Kinder Morgan Secures Enough Commitments for Eagle Ford KMCC Pipeline

Company Officials Say Kinder Morgan's Investments in Eagle Ford Crude and Condensate Total $1 Billion
Kinder Morgan's KMCC and Double Eagle System Map

Kinder Morgan’s KMCC and Double Eagle System Map | Click to Enlarge

Kinder Morgan Energy Partners (KMP) says it has secured long-term commitments for more than two-thirds of the 300,000 b/d capacity on its Kinder Morgan Crude and Condensate (KMCC) pipeline. The pipeline connects Eagle Ford crude and condensate to the Houston Ship Channel.

 

 

[Read more...]

Magellan Midstream Partners Will Spend $250 Million on Condensate Splitter

Eagle Ford Condensate Production Was 207,183 b/d in 2013
Magellan Corpus Christi Terminal

Magellan Corpus Christi Terminal | Click to Enlarge

Magellan Midstream Partners announced in late March plans to build a condensate splitter and make infrastructure improvements to its’ Corpus Christi terminal for $250 million. According to company officials, the splitter will be able to process 50,000 b/d of condensate, supported by a long-term commitment from commodities trader Trafigura AG.

[Read more...]

Exterran Acquires Eagle Ford Gas Compression Assets from Chesapeake in $360 Million Deal

Exterran Enters Seven Year Agreement with Access Midstream Partners
MidCon Compression Operations Map

MidCon Compression Operations Map | Click to Enlarge

Exterran Partners will spend $360 million to acquire natural gas compression assets from MidCon Compression, a subsidiary of Chesapeake Energy. These assets will be used by Exterran to provide contract services in the Eagle Ford and other domestic plays.

Included in the deal are 334 compression units, with a total horsepower of ~440,000.

[Read more...]

Portions of BHP’s Eagle Ford Gathering System Closed Due to Corrosion

$1.8 Billion in Eagle Ford Spending Planned from January to June

BHP Billiton LogoBHP Billiton reported in February 2014 that portions of its Eagle Ford gathering system have been temporarily closed due to corrosion. The cause of the corrosion issue is at present being evaluated by the company.

The gathering system closure was revealed in BHP’s December 2013 financial report of Petrohawk. BHP is required to report operations updates and financial results to Petrohawk’s debt holders, after acquiring the company in 2011.

Read more at bhpbilliton.com 

BHP Eagle Ford Gathering Line Closure Operations Impact

According to BHP, production is continuing in the Eagle Ford, despite the interruption from the line closure. The company has increased the use of trucking to deliver product to market, and claims that there should be no significant impact on production.

BHP Eagle Ford Expenditures To Go Down in 2014

Onshore U.S. drilling and development cost BHP $2.4 billion in the second half of 2013. About 75% of this expense or $1.8 billion was spent in the Eagle Ford, mostly in the company’s liquids-rich Black Hawk acreage. The company achieved a 72% increase in production for onshore US liquids in the second half of 2013, which was primarily attributable to the Black Hawk acreage.

In 2014, expenditures are expected to decrease in the second half of the financial year, following a 35% decrease in the company’s active rig count to 26.

BHP Eagle Ford Highlights in Second Half of 2013

  • Eagle Ford gathering line system closed due to corrosion
  • BHP using trucks to deliver product to market
  • $1.8 billion Eagle Ford spending in second half of 2013
  • 72% increase in production for onshore US liquids
  • Active rig count down to 26 – 35% decrease
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