Kinder Morgan/Copano JV to expand Eagle Ford Shale gathering, processing and fractionation capacity

Source: Eagle Ford Gathering LLC

Kinder Morgan Energy Partners, L.P. (NYSE: KMP) and Copano Energy, L.L.C. (Nasdaq: CPNO) plan to expand the scope of their Eagle Ford Gathering LLC joint venture. Eagle Ford Gathering will provide more than 200,000 MMBtu per day of incremental gathering and processing capacity to producers in the Eagle Ford Shale through construction of additional pipeline facilities and a long-term agreement with Formosa Hydrocarbons Company for additional processing and fractionation services. 

In addition to 111 miles of pipeline currently under construction, Eagle Ford Gathering will build a 54-mile, 24-inch diameter crossover pipeline between existing Kinder Morgan pipelines, and an additional 20-mile, 20-inch diameter pipeline that will enable the joint venture to deliver gas to Formosa. Kinder Morgan will construct and operate the two additional pipelines. Eagle Ford Gathering recently executed an agreement with Formosa to support its gas processing and fractionation needs, and expand operational flexibility. 

Duane Kokinda, president of Kinder Morgan's Texas Intrastate Pipelines Group, said, "We are pleased to enter into this significant new agreement with Formosa, which will provide them with long-term supplies of NGL feedstocks and also make additional processing and fractionation capacity available to the joint venture as early as the fourth quarter of 2011. The crossover pipeline will have capacity in excess of 400 million cubic feet per day, which will give the joint venture additional options to provide services to Eagle Ford Shale producers." 

"This expansion of our joint venture with Kinder Morgan provides significant additional capacity for Eagle Ford Shale producers and will allow the joint venture to more fully utilize the 600 million cubic feet per day of capacity on its 30-inch pipeline," said R. Bruce Northcutt, Copano Energy's president and chief executive officer. "We expect this additional capacity to be substantially contracted for by early 2011. We are also pleased with the new long-term relationship with Formosa, which brings additional market diversity for the expected growing volume of natural gas liquids from this play." 

Kinder Morgan and Copano will invest approximately $100 million to construct the crossover pipeline and related facilities and expect to complete the new facilities by year-end 2011. Eagle Ford Gathering's previously announced approximately $175 million, 30-inch pipeline in the western portion of the shale play is under construction and remains on schedule to be completed in the third quarter of 2011. Copano will serve as operator of the 30-inch pipeline and serves as managing member of Eagle Ford Gathering.

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