The assets of Piceance Creek Pipeline, LLC consist primarily of a recently constructed 48-mile, 36-inch diameter natural gas gathering pipeline in the Piceance Basin of northwest Colorado. As a part of the transaction, EnCana has signed a long term, fixed-fee gathering contract and dedicated significant production to the system for the life of the associated lease holdings. The transaction is expected to be accretive to Enterprise in 2007.
The new Piceance Creek Gathering System (PCGS), with capacity of 1.6 billion cubic feet per day (Bcf/d), extends from a connection with EnCana's 32-mile, 24-inch diameter Great Divide Gathering System near Parachute, Colorado, northward through the heart of the Piceance Basin to Enterprise's 1.5 Bcf/d Meeker gas treating and processing complex, which is currently under construction. Connectivity to the Great Divide system will provide PCGS with access to production in the southern portion of the basin along the I-70 corridor, including production from EnCana's Mamm Creek field. PCGS is expected to be placed in service this month with initial volumes of approximately 500 million cubic feet per day (MMcf/d) of natural gas, and volumes are expected to ramp up to approximately 625 MMcf/d by year-end 2007, with a significant portion of these volumes being produced by EnCana, one of the largest natural gas producers in the region.
"With access to the most active producing areas in the Piceance Basin, this gathering system represents a strategically important addition to our assets and business opportunities in the region," said Robert G. Phillips, Enterprise president and chief executive officer. "This acquisition and long term gathering agreement with EnCana, along with Enterprise's previously announced Meeker treating and processing complex and the recent 30-year midstream services agreement with ExxonMobil, positions Enterprise to become a premier midstream player in the Piceance Basin. Additionally, this new pipeline system is expected to provide producers throughout the basin with a direct conduit to the Meeker complex, as well as pipeline access to Enterprise's Mid-America natural gas liquids (NGLs) pipeline system and interconnects with various interstate natural gas pipelines that export gas from the Rocky Mountain region, including the new Rockies Express Pipeline."
Phase I of the Meeker complex, which is supported by commitments from EnCana, is on schedule for a mid-2007 start up, and will be capable of treating and cryogenically processing up to 750 MMcf/d of natural gas and extracting as much as 35,000 barrels per day (BPD) of NGLs. Supported by additional commitments from EnCana, Phase II will expand capacity of the Meeker facility to 1.5 Bcf/d and 70,000 BPD of NGLs. Phase II is expected to be completed in mid-2008. The expansion of the partnership's Mid-America Pipeline system, now under construction, will provide increased export capacity for NGLs produced from Meeker and elsewhere in the Rocky Mountain region, including the Piceance Basin.
Current natural gas production from the Piceance Basin, which covers approximately 6,000 square miles, exceeds 1 Bcf/d from more than 4,800 wells and has been growing at an annualized rate averaging 25 percent over the past five years. With third party estimates suggesting 20 trillion cubic feet of undeveloped reserves, the Piceance Basin offers long-term opportunities for Enterprise to continue to expand its system to serve producers developing this extensive resource play.
Enterprise Products Partners L.P. is one of the largest publicly traded energy partnerships with an enterprise value of approximately $17 billion, and is a North American provider of midstream energy services to producers and consumers of natural gas, NGLs and crude oil. Enterprise transports natural gas, NGLs and crude oil through more than 34,000 miles of onshore and offshore pipelines. Services include natural gas transportation, gathering, processing and storage; NGL fractionation (or separation), transportation, storage, and import and export terminaling; crude oil transportation and offshore production platform services.
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