Enterprise to Provide Crude Oil and Natural Gas Midstream Services, Build Pipeline in Eagle Ford Shale

September 2010 Vol. 237 No. 9

Enterprise Products Partners L.P. announced Sept. 1 that its operating subsidiaries have entered into long-term agreements with EOG Resources, Inc. to provide a comprehensive package of midstream energy services to EOG’s growing crude oil and natural gas production in the prolific Eagle Ford Shale in South Texas.

Enterprise will provide EOG with crude oil transportation, storage and exchange; natural gas transportation, treating and processing; and natural gas liquids (NGL) transportation and fractionation, among other services.

“The South Texas Eagle Ford has the potential to be one of the largest crude oil discoveries in the United States, including the Deep Water Gulf of Mexico, in the last 40 years and we believe we have captured 900 million barrels of oil equivalent, net on our 505,000 net acreage position in the play. Contracting with Enterprise, which brings a comprehensive program of midstream services, is a strategic move for EOG in marketing our production,” said Mark G. Papa, EOG’s chairman and CEO.

As part of its long-term agreements, Enterprise will construct a 140-mile pipeline originating in northwestern Karnes County to transport EOG’s crude oil production from the Eagle Ford Shale. The pipeline will extend to its existing crude oil system in Austin County where it will connect to the partnership’s Sealy Station. The pipeline, which is anchored by a 10-year, firm transportation agreement with EOG, offers the flexibility to access the Houston refinery market or the Enterprise-operated Seaway Pipeline system that provides a direct link to Cushing, Oklahoma, a major domestic crude oil storage and trading hub. With a capacity of approximately 350,000 barrels per day, the crude oil pipeline will be large enough not only to meet EOG’s requirements, but to accommodate other Eagle Ford producers, many of whom are currently in discussions with Enterprise.

Enterprise plans to build central delivery points for receiving crude oil from trucks and gathering pipelines at multiple locations along the crude oil pipeline route. Completion of the crude oil pipeline project is expected in the first quarter of 2012. In the interim, Enterprise is providing crude oil transportation services via trucks until the pipeline is in service.

Enterprise will also provide firm natural gas transportation and processing, as well as NGL transportation and fractionation services to EOG, anchored by seven-year contracts. In support of this initiative, Enterprise has committed to the construction of 52 miles of additional pipeline laterals to complement its previously announced Eagle Ford rich natural gas mainline project.

In addition to rich and lean natural gas transportation capabilities, Enterprise will provide EOG with natural gas processing services at the partnership’s planned cryogenic gas processing facility. With an initial capacity of 600 million cubic feet per day, the new processing plant is projected to be in service in mid 2012. The NGLs recovered from EOG’s natural gas volumes at the new plant will be transported through Enterprise’s recently announced 127-mile, 12-inch diameter NGL pipeline to its Mont Belvieu complex where Enterprise will construct a fifth NGL fractionator. Prior to the completion of these new gas processing and NGL facilities, Enterprise will use its integrated network of South Texas infrastructure to process EOG’s natural gas and to transport and fractionate the NGLs recovered from EOG’s natural gas production.

Activity in the Eagle Ford Shale continues to exceed industry expectations as more than 90 rigs working in the play have drilled more than 175 wells to date. Current production from the play is estimated at approximately 300 million cubic feet per day of natural gas and 40,000 BPD of crude oil and condensate.

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