Enterprise inks long-term Eagle Ford Shale condensate, crude midstream contract with Pioneer

Source: Enterprise Products Partners

Enterprise Products Partners (NYSE:EPD) has entered into 10-year agreements with each of Pioneer Natural Resources USA, Inc. (NYSE:PXD), Reliance Eagleford Upstream Holding LP and Newpek, LLC (collectively, the Pioneer JV) under which Enterprise will provide a full scope of midstream energy services to handle liquid-rich natural gas and crude oil production from the Pioneer JV’s acreage in the Eagle Ford Shale play in South Texas.

The agreements cover a significant portion of the Pioneer JV’s expected Eagle Ford Shale  production, including commitments for firm natural gas transportation, natural gas processing, natural gas liquid (NGL) fractionation and transportation services and crude oil marketing. 

The Pioneer JV’s NGL-rich natural gas will initially be processed using Enterprise’s existing U.S. Gulf Coast facilities until it can be processed at Enterprise’s previously announced natural gas processing plant that is under development in South Texas. This cryogenic facility is designed for an initial capacity of 600 million cubic feet per day (MMcf/d) and initially will have the capability to extract as much as 60,000 barrels per day (BPD) of NGLs. Completion of this processing plant is expected early in 2012. 

The Pioneer JV’s NGL production will ultimately be transported on Enterprise’s new 127-mile NGL pipeline that will extend from the new natural gas processing plant to Enterprise’s complex at Mont Belvieu, Texas. The new NGL pipeline will have an initial capacity of more than 60,000 BPD, which can be readily expandable to over 120,000 BPD, and is also scheduled for completion in early 2012. 

To accommodate the additional NGLs, Enterprise has announced the construction of a fifth NGL fractionation train at its Mont Belvieu facility. The new 75,000 BPD NGL fractionator is scheduled to be in service in early 2012. In addition, Enterprise’s fourth NGL fractionation train, which also has a capacity of 75,000 BPD, is scheduled to begin operations by the end of 2010. The addition of these two new fractionation units will increase Enterprise’s total NGL fractionation capacity at Mont Belvieu to approximately 380,000 BPD. 

As part of the crude oil agreements, Enterprise will construct approximately 100 miles of supply laterals that will deliver crude oil production from the Pioneer JV into the new 140-mile pipeline Enterprise announced earlier this year. 

The Pioneer JV’s producing area in the Eagle Ford Shale currently covers over 300,000 gross acres in McMullen, Atascosa, Live Oak, Bee, Karnes and DeWitt counties. The gathering lines required to link the producing wells to Enterprise’s midstream assets will be provided by EFS Midstream LLC, a joint venture between Pioneer and Reliance. The agreements with Pioneer and its JV partners marks the fourth major midstream deal Enterprise has executed with Eagle Ford producers in the past year. 

Activity in the Eagle Ford Shale continues to increase with approximately 100 rigs currently working in the play which have drilled nearly 175 wells. Current production from the play is approximately 300 MMcf/d of natural gas and 40,000 BPD of crude oil and condensate.

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