Condensate City – Eagle Ford Crude Infrastructure – Part 2 – Kinder Morgan and Magellan

Two years ago, the Double Eagle condensate pipeline from the western oil and rich gas windows of the South Texas Eagle Ford basin simply provided access to Corpus Christi. By early 2015, the Double Eagle will be linked to the Kinder Morgan crude and condensate pipeline to Houston. Together the two systems will offer shippers access to Corpus Christi, Houston, condensate splitter capacity and diluent pipelines to western Canada. Today we describe the growth of this multi-destination delivery system.

This is Part 2 in our new series updating RBN’s analysis of Eagle Ford infrastructure. In Part 1 (see Condensate City – Finding a Home For Eagle Ford Crude) we described a five-fold increase in crude oil production over the past three years to 1.5 MMb/d. We explained that unlike other basins such as the Bakken in North Dakota, takeaway capacity has not been a big challenge for Eagle Ford producers. Instead the varying quality and in particular the high percentage of condensate in liquids output (about 45 percent) has caused headaches for producers and refiners alike. We also noted that two main pipeline routes to market have been developed from the Eagle Ford – south to the Port of Corpus Christi and East to Houston area refineries. In this episode we look at the developing partnership between midstream companies Magellan Midstream Partners and Kinder Morgan to provide producers and shippers the option of multiple destinations for condensate and crude. We originally covered some of these developments two years ago in Part 3 of our Knocking on Heaven’s Door blog series. We also covered Kinder Morgan (see It’s a Kinder Magic) and Magellan’s (see The Gates of Magellan) terminal and pipeline assets previously. More recently we covered evolving regulations from the Bureau of Industry and Security (BIS) governing the export of processed condensate (see Navigating Condensate Exports) that will require segregation en-route to tide water. 

Double Eagle Pipeline

In 2011 Magellan partnered with Copano Energy to build the 140 mile 100Mb/d “Double Eagle” condensate pipeline (see the red line on Figure #1). The pipeline was completed in 2013 connecting Eagle Ford gathering systems at Gardendale to the West of the Eagle Ford oil window and Karnes County to the East with a converted Copano natural gas pipeline in Three Rivers that runs south to Corpus Christi. The pipeline terminates at Magellan’s marine dock and terminal in Nueces Bay in the Corpus Christi Ship Channel. That terminal is well connected to Corpus refineries (Citgo, Flint Hills, Valero) and petrochemical plants (Occidental) and Magellan has 3 MMBbl of existing storage there that is being expanded to 6 MMBbl to accommodate condensate. As we shall see later in this series, Magellan is building a 50 Mb/d condensate splitter at Corpus. The Magellan dock has capacity to load 100 Mb/d of condensate onto barges and tankers. At Three Rivers there is a 15 Mb/d truck unloading receipt facility on the pipeline. The original anchor shippers on Double Eagle were Statoil and Talisman. In January 2013 Kinder Morgan bought Copano – giving them a 50 percent share in the Double Eagle assets.

Source: Kinder Morgan Presentation (Click to Enlarge)

Kinder Morgan Crude and Condensate Pipeline (KMCC)

The 250-mile KMCC pipeline came online in June 2012 with 300 Mb/d capacity. The pipeline was a mixture of new construction (70 miles) and converted natural gas pipeline (113 miles) originally starting in the Blackhawk field at Cuero in DeWitt County. KMCC delivers crude and condensate to the Houston Ship Channel and has been expanded several times with new extensions that we will describe next. The pipeline is batch operated – meaning that condensate and crude can be segregated. The map in Figure #1 shows the current extent of the KMCC pipeline (blue line) as well as the interconnect to Double Eagle (green dashed circle on the map) that is currently under construction and expected complete by Q1 2015. Kinder Morgan SEC filings indicate that committed capacity on KMCC is expected to be as high as 195 Mb/d in 2015.