Kinder Morgan Energy Partners has entered into a long-term, fee-based agreement with BP to underwrite an additional 50,000 bpd of throughput capacity at the petroleum condensate processing facility Kinder Morgan is constructing near its Galena Park terminal on the Houston Ship Channel, the companies said on Thursday.
With the new agreement, Kinder Morgan will invest an additional $170 million to add a second unit to its previously announced $200 million condensate processing facility, thereby raising the facilitys total capacity to 100,000 bpd.
The investment also includes the company building an additional 700,000 bbl of storage capacity for product being split at the facility.
We are pleased to secure long-term contracts for all of the throughput capacity at our facility, and provide BP with the processing needed for Eagle Ford Shale production and other condensates, said Ron McClain, president of Kinder Morgan's products and pipelines business.
Combined with our recently completed Kinder Morgan Crude Condensate (KMCC) pipeline, we are able to provide unparalleled connectivity to crude oil and clean products markets on the Texas Gulf Coast," he added.
The new project is expected to be completed in the second quarter of 2015.
Kinder Morgans processing facility will split condensate into its various components, such as light and heavy naphtha, kerosene, diesel and gas oil, and can be further expanded pending additional market interest, according to the company.
Kinder Morgan announced the first phase of its processing facility when it secured the initial commitment of 25,000 bpd of capacity. The company expects to place the first unit in service in the first quarter of 2014.
BP is proud to build upon our strategic partnership with Kinder Morgan through an increased footprint in Galena Park," said Paul Reed, CEO of BPs integrated supply and trading business.
"We believe that by accessing this additional throughput capacity, we will be better placed to provide US producers a full suite of services including access to the best homes for their crude and condensates. It will also enable BP to service our customers better and more efficiently manage their feedstock and product needs."
KMCC is an approximately 180-mile pipeline that transports crude and condensate from the Eagle Ford Shale in South Texas to the Houston Ship Channel.