Kinder Morgan has reached an expanded agreement with BP that will support the development of an additional 50,000 b/d condensate processing facility at Galena Park.

Kinder Morgan will invest an additional $170 million to add a second processing unit and add 700,000 barrels of storage at the site along the Houston Ship Channel. Total condensate processing capacity at the site will increase to 100,000 b/d.

“We are pleased to secure long-term contracts for all of the throughput capacity at our facility, and provide BP with the processing needed for Eagle Ford Shale production and other condensates,” said KMP Products Pipelines President Ron McClain. “Combined with our recently completed Kinder Morgan Crude Condensate (KMCC) pipeline, we are able to provide unparalleled connectivity to crude oil and clean products markets on the Texas Gulf Coast.”

Condensate processing facilities split the liquid into its various components - light and heavy naptha, kerosene, diesel, and gas oil. The individual components are more easily marketed.

As of the first quarter of 2013, the Eagle Ford is estimated to be producing more than 800,000 b/d of liquids, but only a little more than 400,000 b/d is considered oil. The remaining balance is attributable to condensates and NGLs. The amount of condensate production varies by well across the play, but as much as 50% of liquids production is potentially viewed as condensate by midstream companies.

Paul Reed, Chief Executive of BP’s integrated supply and trading business, said, “BP is proud to build upon our strategic partnership with Kinder Morgan through an increased footprint in Galena Park. We believe that by accessing this additional throughput capacity we will be better placed to provide U.S. producers a full suite of services including access to the best homes for their crude and condensates. It will also enable BP to service our customers better and more efficiently manage their feedstock and product needs. BP remains committed to helping unlock additional U.S. domestic energy production.”

This announcement comes in addition to the company's previous commitment to build a $200 million processing facility at Galena Park. BP committed to supply 40,000 b/d of condensate and agreed to a long-term lease of 750,000 barrels of storage at the facility in the summer of 2012. You can read more in the article BP - Kinder Morgan Ink Long-Term Eagle Ford Processing Agreement. The first phase is expected to be in service by the first quarter of 2014.

Read the latest press release at kindermorgan.com