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:

Natural Gas Pipelines:

....In the quarter, Rockies Express Pipeline produced improved results due to a property tax settlement, equity income from the Eagle Ford Gathering and EagleHawk Field Services joint ventures increased due to higher volumes, and Kinder Morgan Treating benefited from the SouthTex and Gas Chill acquisitions. “Growth for the year versus 2010 was attributable to contributions from the KinderHawk and EagleHawk acquisitions, Fayetteville Express Pipeline, commencement of commercial operations of Eagle Ford Gathering, increased revenues from the Midcontinent Express Pipeline expansion, and improved gathering results due to favorable processing spreads on Casper-Douglas and increased volumes at Red Cedar,” Kinder said. Results for both the quarter and the year were impacted by lower results from the Trailblazer and KMIGT pipelines.

$350 Million in Eagle Ford Condensate Pipeline Infrastructure

Kinder is investing approximately $130 million to build a petroleum condensate processing facility near its Galena Park terminal on the Houston Ship Channel. The initial throughput capacity of 25,000 barrels per day (bpd) is being supported by a fee-based contract with a major oil customer, and the plant can be expanded up to 100,000 bpd. The company will own and operate the plant, which will split condensate into its various components. It is expected to be in service by January of 2014.

The location of the facility, when combined with Kinder Morgan’s previously announced $220 million crude/condensate pipeline, will provide customers with unparalleled connectivity to crude oil and clean products markets on the Texas Gulf Coast. The crude/condensate pipeline will transport product from the Eagle Ford Shale in south Texas to the Houston Ship Channel. It will consist of almost 70 miles of new-build construction and 113 miles of converted natural gas pipeline. Construction of the pipeline continues and the company expects it to begin service in the second quarter of 2012.

Eagle Ford Gathering

Eagle Ford Gathering, a joint venture between KMP and Copano Energy in south Texas, executed interruptible service contracts with several producers totaling more than 90,000 MMBtu per day, of which over 21,000 MMBtu per day will convert to long-term firm contracts when the joint venture’s processing capabilities increase in the second quarter of 2013. The joint venture also completed its delivery facilities to the Formosa Point Comfort processing plant in Jackson County and expects to initiate flow to Formosa in February 2012.

The joint venture has about 400 miles of pipelines (including its capacity rights in certain KMP pipelines) with capacity to gather and process over 700,000 MMBtu per day. Including its 50 percent equity interest in Eagle Ford Gathering and its 25 percent interest in EagleHawk Field Services (and excluding the crude/condensate pipeline), this segment has committed approximately $400 million to expansion projects in the Eagle Ford Shale.

Read the entire press release at