Energy Transfer to Convert Texas Gas Pipe to Carry Crude

Energy Transfer Partners LP plans to convert a natural gas pipeline to carry crude and condensate from the Eagle Ford shale formation in South Texas to Corpus Christi on the Gulf Coast.

Trafigura Beheer BV will lease all the space on the 82-mile-long, 100,000-barrel-a-day pipeline, the companies said in a joint statement. The line is expected to be operational in nine to 12 months.

The pipeline will feed Trafigura’s shipping complex at the Port of Corpus Christi, Jeff Kopp, the company’s Houston-based director of oil for North America, said by e-mail.

Trafigura, the world’s second-largest privately owned non-ferrous and oil trading company, is building a second deepwater dock at its complex at the Port of Corpus Christi, which would allow the company to berth three medium-range tankers and two barges at the same time.

Demand for waterborne Eagle Ford crude is expected to come from refining centers in Houston, Louisiana, the Canadian Atlantic Coast and the U.S. East Coast, Kopp said. The U.S. restricts exports of crude oil but generally allows licenses for shipments to Canada.

“This pipeline, combined with our deep-water terminal, enables Trafigura to offer a complete solution to producers who seek to take Eagle Ford to the broader market,” Kopp said in a statement.

Refining Centers

Oil production in the Eagle Ford play skyrocketed to more than 664,000 barrels a day in August from about 11,000 in August 2010, according to data from the Texas Railroad Commission.

“The repurposing of the existing natural gas pipeline makes this a very timely solution for the growing supplies of crude oil and condensate in the area,” said Lee Hanse, executive vice president for business development for Energy Transfer Partners.

The Port of Corpus Christi, to which much of the Eagle Ford crude is already shipped by pipeline, moved out 367,535 barrels of oil a day in August, up 91 percent from the same month in 2012.

The Louisiana Offshore Oil Port, the U.S.’s largest waterborne petroleum import terminal, received 139,953 barrels of oil a day from Texas in July, according to the state Natural Resources Department. LOOP received its first tanker of domestic crude in August 2012 after making modifications to one of its three offshore buoys to allow receipts from smaller domestic vessels, such as those carrying Eagle Ford crude.

Producers using directional drilling and hydraulic fracturing have boosted the yield in shale formations such as the Eagle Ford and the Bakken in North Dakota, leading a surge in U.S. oil production. Output rose to 7.9 million barrels a day the week of Oct. 18, the most since March 1989, Energy Information Administration data show.

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