NGL Energy Acquires Eagle Ford Disposal Assets In Coastal Plains Deal - $116 Million

High Sierra Water Disposal Facility

NGL Energy Partners has acquired Coastal Plains #1, LLC, a subsidiary of WinCo Development, for $109.5 million in cash and approximately $6.8 million in stock (~$116 million total). The water disposal facilities will be added to NGL Energy partner's existing business in the area - High Sierra Water-Eagle Ford, LLC.

The deal adds three water disposal facilities to High Sierra's existing water gathering and treatment portfolio. The deal includes the option to acquire two permits and a fourth water disposal facility that is under construction. Costal Plains #1's 40 employees will now work for High Sierra Water.

“With the addition of the Coastal Plains assets and employees, NGL is uniquely positioned to serve the needs of producers in the Eagle Ford through our High Sierra business. We are also looking forward to applying our extensive technical expertise in water treatment as demand for the recycling of oilfield waste water increases.”

— Jim Winter, SVP, High Sierra - Water.

High Sierra's Eagle Ford footprint includes 240,000 b/d of water disposal capacity, water & crude oil transportation assets, a crude oil marketing segment, and mobile on-site solids processing equipment.

The deal follows NGL Energy's Acquisition of Crescent Terminals and Cierra Marine in July.

NGL Energy's business segments provide crude oil logistics, NGL logistics, and water treatment services in the Gulf Coast region. Overall, High Sierra expects the assets improve their operations in many ways.

The company's VP of investor relations stated:

"We are now able to offer reliable, high quality and safe disposal services to producers operating throughout the region. Having multiple large capacity facilities allows us to balance utilization, reducing wait times, trucking miles and ultimately costs. In addition, we are evaluating a number of projects to bring our industry leading recycling technology to the play."

NuStar Planning Eagle Ford Oil Pipeline Expansion - Open Season Started

NuStar Energy Eagle Ford System Map

NuStar Energy has launched a binding open season to determine interest in an expansion of the company's Eagle Ford Shale - South Texas oil system. The expansion will add as much as 100,000 b/d of capacity moving oil to the company's Corpus Christi North Beach facility.

NuStar spent $425 million to acquire assets from TexStar Midstream in late 2012 and those assets will be part of the expansion.

The expansion between the company's Gardendale Terminal in La Salle County and Corpus Christi will be conducted in two phases:

• Phase 1 - Will add 35,000 b/d of throughput available in the 3rd quarter of 2014
• Phase 2 - Will add 65,000 b/d of throughput available in the first quarter of 2015

The expansion will raise total capacity in the system to ~200,000 b/d. NuStar is making 90,000 of the 100,000 b/d expansion available to shippers.

The open season continues through noon on August 30, 2013

Read the full press release at nustarenergy.com

Frio County Commissioners Court Educating Locals On Disposal Wells In Dilley

There has been growing concern in Frio County related to the number of Eagle Ford disposal wells located nearby. The county has the most disposal wells and the fewest number of oil wells of any major Eagle Ford county. In 2012, over 10 million barrels of waste were disposed of in the county. The number of trucks coming through the area and a growing number of disposal wells has locals a little timid when it comes to their groundwater. The Frio County Commissioners Court held a meeting in Dilley to educate locals about waste water injection.

Note: It is estimated that 20+ gallons of waste water are created for every foot of rock that is drilled. Based on that metric, Eagle Ford wells have between 5,000 and 10,000 barrels of waste each.

“Up to now, I have not been told of a single water source that has ever been contaminated.”

— Noel Perez, Dilley City Administrator.

Groundwater is seldom to almost never contaminated by disposal wells, so the worry isn't warranted. With that, it's still important to monitor local changes to make sure the sudden increase is disposal volumes over the past few years hasn't caused any unintended changes.

Freeport LNG Looking For Financing - Planning Gas Exports

Freeport TX LNG

Freeport LNG is looking to raise more than $7.5 billion to begin construction at its proposed LNG export facility in Freeport, TX.

The Energy Department has approved 1.4 Bcfd in exports at the site and the company is seeking approval for an additional 1.4 Bcfd. The facility still needs FERC approval and expects to know more in 2014. If everything goes as planned, one export train a year will come online starting in 2017.

The Freeport LNG facility has agreements to export gas for Osaka Gas, Chubu Electric Power, and BP.

Cheniere Energy is the only LNG export facility to receive full approval to export US natural gas. The Cheniere facility is located at Sabine Pass and construction started in August of 2012.

Production continues to grow in what are historically consuming areas like the Marcellus Shale. If production continues to grow in the Northeast, exports will be a welcomed market for Eagle Ford gas. Exports might even be needed to support any significant amount of natural gas development.

Port of Corpus Christi Has Barges Waiting To Move Eagle Ford Oil

Trafigura Terminals Eagle Ford Port in Corpus Christi

The Port of Corpus Christi has gone from moving less than 10,000 b/d of crude oil in 2011 to approximately 200,000 b/d in August 2012 to almost 350,000 b/d now.

Ships are now standing in line to move Eagle Ford crude and port expansions simply won't come fast enough.

“The longest [wait] I’ve seen is about seven days,” Ray Harrison, the port’s assistant harbor master said last Friday.

There are several construction projects underway or in the works

• A new dock that can handle two 30,000 barrel barges will be in service this month
• A new public dock has been approved that can handle four 30,000 barrel barges
• Two other private projects on port land are being designed to load ships with 500,000 barrel capacity
• Trafigura Terminals is expanding and will be able to handle three medium-range tankers and two inland barges at the same time

As noted by RBN Energy, approximately 30% of the oil shipped out of the port is headed for Morgan City, almost 30% is headed for Houston, another ~10% Beaumont, and ~10% to Texas City. The rest is sent to various locations throughout Texas and Louisiana.

There have been several stories on the port in the past few days. You can read more at platts.com,rbnenergy.com, and at learn more about Trafigura's terminal at texdockrail.com