Kinder Morgan & Phillips 66 Eagle Ford Crude Delivery Deal to Supply Sweeny Refinery

KMP will build a 12-inch, 27 mile lateral with initial capactiy of 30,000 b/d

Phillips 66 Sweeny, TX | Click to Enlarge

Kinder Morgan (KMP) and Phillips 66 have reached an Eagle Ford crude delivery deal. KMP will build a 12-inch, 27 mile lateral from its Eagle Ford Crude Condensate pipeline to Phillips 66’s Sweeney Refinery in Brazoria County.

Phillips is committing to take a “significant portion” of the pipeline’s initial 30,000 b/d of capacity. The pipeline will have the potential to be expanded to 100,000 b/d if needed.

KMP will invest approximately $90 million in the project, which also involves adding 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, Texas, and Wharton Pump Station in Wharton County, Texas. Pending receipt of environmental and regulatory approvals, construction is scheduled to begin in the fourth quarter of 2012.

Kinder Morgan’s Eagle Ford Crude Condensate pipeline was brought online in June of 2012.

Read the full press release at

Eagle Ford Natural Gas is Headed for Mexico – Major Pipeline Expansions Planned

U.S. supplies almost 1.5 Bcf/d to Mexico and Eagle Ford growth could mean much more is on its way
Gas Pipeline Photo

Gas Pipeline | Click to Enlarge

Eagle Ford natural gas pipeline expansions are headed for Mexico. An $8 billion expansion of Mexican natural gas infrastructure is being pushed forward. The early focus is on industrial cities in the northern half of the country where a $3 billion expansion is planned.

“Mexico has a unique opportunity, we have access to the world’s cheapest gas,” Mexican Energy Minister Jordy Herrera said of the U.S. supply in announcing the new pipeline plans earlier this year. “This is competitiveness for the industry of our country.”

U.S. companies are lining up to help supply and construct the proposed Mexican infrastructure. Expect to see companies like Kinder Morgan reverse the direction of some of its current natural gas flows and expand pipelines into Mexico. The Eagle Ford currently produces almost 3 bcf/d, but that number could almost triple over the next five years. That’s a lot of natural gas to be absorbed in South Texas. Actually, its much more than the region can absorb. If 5+ bcf/d of additional supply comes online, the natural gas will need a market. That market will either come from Mexico or from across the globe shipped as LNG. Both pipelines and liquefaction facilities come with big price tags, but don’t expect PEMEX (Mexico’s national oil company) to wait around. The country needs natural gas and the Eagle Ford is positioned well to answer.

Read the full story detailing Mexico’s plans at

Copano Energy Eagle Ford Assets Add to Earnings

Copano Energy’s Eagle Ford pipeline and midstream assets boosted the company’s bottom line in the fourth quarter of 2011.

The Texas segment of the company reported growth of 27% in gross margins from Q4 2010 to Q4 2011. The primary boost was from increased pipeline throughput in the Eagle Ford Shale and Barnett Combo plays.  Throughput volumes in the South Texas shale play were up 657%. How’s that for volume growth….. [Read more…]

Apollo Buys El Paso’s E&P Unit Before Kinder Morgan Closes on the Pipeline Segment

El Paso Eagle Ford Shale Map

El Paso Eagle Ford Map | Click to Enlarge

Apollo and El Paso reached a $7.15 billion agreement for El Paso’s E&P segment. The deal is subject to the closing of the El Paso-Kinder Morgan pipeline merger.

El Paso’s exploration and production segment has been on the sales block since the Kinder Morgan deal was announced, but the question remained whether the assets would be sold in pieces or all together.

While Apollo has been rumored to be considering the deal, it comes as a bit of a surprise that the private equity group acquire El Paso E&P. Most industry experts thought El Paso would be a great fit for an international company looking to expand its footprint in the U.S. (e.g. Statoil-Brigham). Low natural gas prices that are limiting many companies’ upstream budgets might have opened a window for the Apollo group to step in. [Read more…]

Kinder Morgan Eagle Ford Infrastructure Updates

Kinder Morgan provided an Eagle Ford pipeline and midstream update in its quarterly call last week. The company realized better results in relation to it’s pipeline and gathering network in the Eagle Ford, while staying on target to complete a $220 million condensate pipeline that will terminate in the Houston Ship Channel. Kinder also announced a $130 million condensate processing facility in Galena Park, TX, that will have capacity of 25,000 b/d initially (potential for 100,000 b/d).  Quotes below: [Read more…]

Reliance – Apollo Evaluate El Paso Assets

Since Kinder Morgan’s $21+ billion acquisition of El Paso was announced, it was believed Kinder would sell the accompanying exploration and production assets. We explored the possibility in more detail in the blog post “El Paso’s Eagle Ford Assets on the Market

The real question is whether the e&p assets will be sold all together or if they will be sold in parts. I’m sure Mr. Kinder knows how much other deals have gone for and he’ll want to get a similar premium for El Paso’s Eagle Ford assets. If he doesn’t get the premium or dang close baked into a deal for the entire business unit, he’ll sell the assets off one by one. Expect a decision on selling the whole or parts real soon. Publicized estimates of El Paso’s e&p value are around $8 billion.

Both Reliance Industries and Apollo Global Management are in talks to buy the unit. Reliance would be buying an operated stake in the U.S. where to date it only acts as a non-operated partner in the Marcellus Shale. Apollo would be adding a significant e&p business that it would likely grow and market to other companies or eventually IPO. Private equity firms like Apollo usually hold assets for 3-10 years.  [Read more…]