Enterprise Products Partners L.P. (NYSE:EPD) signed a six-year agreement to provide Anadarko Petroleum Corporation (NYSE:APC) with a package of midstream services in the Eagle Ford Shale play of South Texas. The latest agreement is in addition to a similar arrangement the two companies executed in September of 2010. Under the terms of the new contract, Enterprise will provide natural gas processing, as well as natural gas liquids (NGL) fractionation and transportation services to accommodate Anadarko's liquids-rich natural gas production from the Eagle Ford Shale.
"The agreement builds on our existing relationship with one of the premier producers in the Eagle Ford Shale and we look forward to continue providing Anadarko with the midstream services needed to handle their growing production in the region," said A.J. "Jim" Teague, Enterprise executive vice president and chief operating officer. "The brisk pace at which we have been executing long-term deals is further indication of the positive outlook for the Eagle Ford Shale. The strong demand for our services also reflects an understanding on the part of Eagle Ford producers that our integrated system can assist them in maximizing the value of their natural gas, NGL and crude oil production."
Enterprise plans to construct a new 46.5-mile, 24-inch diameter pipeline through LaSalle County, Texas to further expand its rich natural gas gathering system. This new infrastructure, along with portions of the partnership's previously announced pipeline expansions will be utilized to handle the additional volumes under the new contract.
Current natural gas processing capacity at the partnership's existing South Texas facilities is 1.5 billion cubic feet per day. With the completion of a new cryogenic processing plant in Lavaca County, Texas, which is expected to begin service in mid-2012, Enterprise would add 600 million cubic feet per day (MMcf/d) of incremental capacity. The partnership will continue to transport and fractionate NGLs recovered from Anadarko's natural gas production using its integrated pipeline and fractionation assets throughout Texas.
Based on public drilling and production data, activity in the Eagle Ford Shale continues to increase.
Approximately 150 rigs are presently working in the play and more than 500 wells have been drilled to date with approximately 300 additional wells in various stages of completion. Current production from the play is estimated at approximately 750 MMcf/d of natural gas and 80,000 barrels per day of crude oil and condensate.