A Houston-based pipeline partnership said Tuesday that it will build a 130-mile crude oil pipeline to transport crude oil from the western region of the Eagle Ford shale to Corpus Christi and other Gulf Coast markets.
Plains All American Pipeline LP said it also will build a marine terminal and 1.5 million barrels of storage to service growing Eagle Ford production.
The project is expected to cost $330 million and be completed in the fourth quarter of 2012. The pipeline will be capable of handling 300,000 barrels a day of oil from the Eagle Ford shale, a vast play that underlies 24 counties from East Texas to the border.
Plains also said it has signed a long-term agreement with a subsidiary of Chesapeake Energy Corp. to transport its oil to the Gulf Coast. Plains said Chesapeake Midstream Development LP, will have the opportunity to acquire as much as a 25 percent interest in the project.
Because of inadequate infrastructure linking development in the Eagle Ford shale to Gulf Coast refineries, many companies must rely on trucking the oil to the Gulf Coast.
Yet the Eagle Ford shale isn’t alone in lacking pipelines to transport oil to Gulf Coast refineries. Infrastructure in U.S. shale plays is trailing their development, said Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University’s Cox School of Business in Dallas.
“What is probably making the Eagle Ford shale a little more critical is the fact that the companies drilling were heavily involved in drilling for natural gas, then the price of natural gas went down, and they jumped into the Eagle Ford shale rather quickly,” Bullock said. “That has made development of infrastructure all the more critical.”
Plains is a publicly traded master limited partnership.