Infrastructure for Eagle Ford shale production to expand

Activity in the Eagle Ford shale continues to heat up, as companies have announced plans to expand natural gas processing plants and to build pipeline connections to them.

Eagle Ford Gathering LLC, a 50-50 joint venture between Houston-based companies Kinder Morgan Energy Partners LP and Copano Energy LLC, will build a $27 million, seven-mile pipeline connection to a processing plant in Matagorda County.

The deal is part of an agreement with Williams Partners LP, which owns the processing plant.

The agreement will provide Eagle Ford Gathering with 100 million cubic feet per day of processing capacity at the Matagorda plant, with an option to increase its capacity to as much as 200 million cubic feet per day, the companies said in a statement.

Eagle Ford Gathering said the pipeline connection will be in service by the final quarter of the year.

Eagle Ford Gathering has been active in the Eagle Ford shale. In September, it expects to complete a 177-mile pipeline system through McMullen, LaSalle, Dimmit and Webb counties.

Another midstream company, Dallas-based Southcross Energy, is building a new national gas processing plant in Refugio County to be completed in the second quarter of 2012. The plant will be located about 25 miles northeast of Corpus Christi near Woodsboro.

Southcross also plans to expand a natural-gas processing plant near Gregory in San Patricio County.
The changes will give Southcross the capability to process 335 million cubic feet per day of natural gas from the Eagle Ford shale.

Southcross CEO David Biegler said the processing plants will mesh well with a major pipeline extension the company is building into McMullen County. In that deal, announced March 8, Southcross said it would build a 25-mile, 20-inch natural gas pipeline to gather, transport and process natural gas from Swift Energy Co.’s acreage in McMullen County to Southcross’ plant in San Patricio County.

The pipeline extension is to be completed by the middle of this year.

In another deal related to the Eagle Ford shale, Denver-based SM Energy Co. reached an agreement to sell some of its Eagle Ford shale acreage to Statoil ASA of Norway and Talisman Energy Inc. for $225 million.

The deal is expected to close in August, a spokesman told Bloomberg News.

The acreage is near property that Statoil and Talisman already own in the Eagle Ford shale.

Companies plan to build natural gas processing plants and to build pipelines to handle production from the Eagle Ford shale of South Texas.