Copano Energy and Magellan Midstream Form Joint Venture to Deliver Eagle Ford Shale Condensate to Corpus Christi

abarrelfullabarrelfull wrote on 23 Dec 2011 07:43
Tags: copano eagle-ford magellan oil pipeline usa

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Copano Energy, L.L.C. (NASDAQ: CPNO) and Magellan Midstream Partners, L.P. (NYSE: MMP) announced today the formation of a joint venture to deliver Eagle Ford Shale condensate to Corpus Christi, Texas. The 50/50 joint venture, known as Double Eagle Pipeline LLC, will construct and own approximately 140 miles of new pipeline to connect an existing 50-mile pipeline segment owned by Copano to Karnes, Live Oak, McMullen and LaSalle Counties of Texas, enabling delivery of condensate to Magellan’s terminal in Corpus Christi. The initial capacity of the pipeline will be 100,000 barrels per day. Double Eagle also will construct a new truck unloading facility along the pipeline near Three Rivers, Texas for deliveries of condensate destined for Corpus Christi.

The joint venture project is supported by long-term customer commitments from Talisman Energy USA Inc. and Statoil Marketing and Trading (US) Inc., major producers with significant acreage in the rich gas window of the Eagle Ford Shale. The expected cost of the new joint venture facilities is approximately $150 million and will be shared equally by Copano and Magellan. Copano will oversee construction of the new pipeline and serve as operator. The companies expect to provide limited services by the end of 2012, with full service available beginning in the first quarter of 2013.

“Magellan looks forward to joining forces with Copano for this project that provides significant strategic value for both parties and our customers,” said Michael Mears, Magellan’s president and chief executive officer. “Combined, we are able to provide an attractive option for shippers to deliver petrochemical quality Eagle Ford condensate for use in Corpus Christi or higher-valued Texas markets via Magellan’s marine capabilities.”

“This project represents the next logical step in Copano’s strategy of offering a full set of midstream services to Eagle Ford Shale producers and we look forward to working with Magellan on this opportunity,” said R. Bruce Northcutt, Copano’s president and chief executive officer. “By combining Copano’s pipeline assets with access to Magellan’s terminal at Corpus Christi, the joint venture will be able to leverage existing infrastructure and provide producers timely access to market alternatives at very competitive rates. The joint venture will continue to look for ways to expand the project and capture other condensate and oil-related growth opportunities in the Eagle Ford Shale play.”

In connection with the joint venture, Copano will convert its existing 50-mile pipeline from natural gas to condensate service, and Magellan will make enhancements to its Corpus Christi terminal, including the construction of 500,000 barrels of new dedicated condensate storage and a new dedicated dock delivery pipeline.

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