Enterprise Acquires West Texas Pipeline

March 2011, Vol. 238 No. 3

Enterprise Products Partners L.P. has purchased a 39-mile carbon dioxide pipeline from Trinity Pipeline L.P. with plans to convert it to crude service in connection with the partnership’s strategy to expand its gathering system in the Permian Basin of West Texas. The 8-inch diameter pipeline, which extends from Reeves County, TX to Lea County, NM, has a capacity of approximately 54,000 bpd of crude.

According to the company, the newly acquired asset will provide a growing number of major producers in the promising Bone Springs/Avalon Play with an important outlet for their crude oil through a link to the Basin Pipeline. Accessing the Basin system will allow shippers to reach other key areas of Enterprise’s integrated energy network, including major storage facilities at Midland, TX and Cushing, OK.

Enterprise Executive Vice President and Chief Operating Officer A.J. “Jim” Teague said, “The emerging Bone Springs/Avalon Play offers visibility to crude oil and rich natural gas opportunities, yet the infrastructure necessary to support the increased production activity is underdeveloped. In that regard, the Bone Springs/Avalon play shares some similarities with the Eagle Ford Shale play in South Texas, where Enterprise holds a growing position as a midstream services provider. This strategic acquisition provides us with a foothold should we decide to expand our midstream network to meet projected growth in the area.”

The Bone Springs/Avalon Play is characterized by an interval of shale, sandstone and limestone up to 2,000 feet thick. Prospective production has been identified in multiple horizons on more than two million acres throughout Eddy and Lea counties in New Mexico and Reeves, Loving, Ward and Culberson counties in Texas. Enterprise’s own estimates suggest that crude oil production of 120,000 bpd and natural gas production of 500 MMcf/d is possible by 2018 based on 400 wells drilled per year. There are currently 30 rigs operating in the play.

In conjunction with the acquisition, Enterprise will build a central delivery point and associated infrastructure for receiving truck deliveries of crude oil and transporting it to the Basin Pipeline. Construction of the new facilities and conversion of the pipeline to crude oil service is expected to be completed by the end of 2011.