Under the terms of the agreement, ExxonMobil's natural gas production from its Piceance Development Project, which encompasses more than 29,000 acres in Rio Blanco County, Colorado, will be dedicated to Enterprise. The fee-based agreement includes an option for Enterprise to recover natural gas liquids (NGLs) beyond those extracted to condition the gas to meet downstream pipeline specifications.
To provide these services, Enterprise expects to invest approximately $185 million to construct new plant and pipeline facilities to compress the natural gas, treat it to remove impurities, extract NGLs, and deliver gas to the various pipeline transmission systems that serve the region. Construction of the facilities will begin after the receipt of the necessary permits and approvals and is expected to be completed in late 2008.
"With this project, Enterprise continues to expand critical infrastructure to assist in the development of one of the nation's most important new energy resource plays," said Robert G. Phillips, Enterprise president and CEO. "Our strategy in the Piceance Basin is to leverage the partnership's existing assets with additional facilities capable of supporting current and future natural gas development. We look forward to a long and productive relationship through this agreement."
Phillips added, "This project complements Enterprise's growth projects in the Rocky Mountain region, further enhancing the partnership's integrated energy value chain. As part of the services we are providing ExxonMobil under this agreement, Enterprise has the option to extract additional NGLs at its Meeker processing plant currently under construction in the Piceance Basin. The NGLs associated with this project will be transported to market through Enterprise's Mid-America Pipeline system, which is currently being expanded in the region."
Current natural gas production from the Piceance Basin, which covers approximately 6,000 square miles in northwest Colorado, is about 1 billion cubic feet per day from roughly 4,800 wells. About 60 rigs are currently working in the basin where annual volume growth has averaged 25 percent over the past five years. An estimated 20 trillion cubic feet of reserves remain undeveloped.
The processing agreement with ExxonMobil was reflected in the schedule of organic growth capital projects that Enterprise reviewed with the financial community at its Aug. 16, 2006, analyst and investor meeting in New York City.
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