Kinder Morgan Energy Partners LP (NYSE: KMP) will build and operate a new, 213-mile, 16-inch diameter pipeline to transport carbon dioxide (CO2) from the company’s St. Johns source field in Apache County, Ariz., to the Kinder Morgan-operated Cortez Pipeline in Torrance County, NM.
The new Lobos Pipeline will have an initial capacity of 300 million standard cubic feet per day and will support current and future enhanced oil recovery (EOR) projects owned by Kinder Morgan and other operators in the Permian Basin of West Texas and eastern New Mexico. The company plans to invest approximately $300 million on the pipeline, and an additional $700 million to drill wells and build field gathering, treatment and compression facilities at the St. Johns field. The project is expected to be in service by the third quarter of 2016 pending receipt of environmental and regulatory approvals.
“This project will help address the market’s growing demand for CO2 and enable Permian Basin producers to increase oil production by using the product in EOR projects,” said James Wuerth, president of KMP’s CO2 group. “EOR is measurably increasing the nation’s recoverable oil supply and will continue to do so in the future.”
Construction of the Lobos Pipeline will follow existing utility rights-of-way wherever possible to minimize environmental impacts. The project will employ approximately 1,200 contractors during construction. The economic impact of construction for a project of this size will be significant as workers will reside locally and purchase goods and services from local businesses during the construction period.