The development of the Eagle Ford shale in South Texas is expected to cause a growth in production that the current infrastructure cannot handle, a panel of executives said at a recent forum.

Many of the speakers at Hart Energy's Eagle Ford: Developing Unconventional Gas (DUG) Conference and Exhibition in San Antonio said their companies are investing heavily to catch up with the need for additional pipelines, storage facilities and terminals in South Texas.

Rick Cargile, president of the southern business unit of DCP Midstream Partners LP, said current forecasts show that total natural gas production from the Eagle Ford will double to around 2 billion cubic feet (Bcf) per day by 2013 and will triple to 3 Bcf per day by 2017.

Production of liquids, including crude and condensate, from the Eagle Ford is expected to show a similar increase. Current liquid production from Eagle Ford is around 160,000 barrels per day, a rate which should double by the end of 2013. Liquids production should triple to around 480,000 barrels per day by 2018.

The infrastructure required to move the growing amount of liquids and natural gas production is not yet complete. "The Eagle Ford is an infrastructure desert," he said. DCP Midstream has assets in most shale

DCP Midstream has assets in most shale plays across the U.S. and has plans to build more assets to cope with the expected additional production from Eagle Ford shale.

Within the Eagle Ford, DCP Midstream has agreements covering production from more than 500,000 acres. In addition, it has 0.8 Bcf per day of gas processing capacity in place and sees the potential opportunity to build up to three more processing plants.

The first, Eagle Plant, is currently under construction with a capacity of 200 million cubic feet (MMcf) per day and scheduled to be commissioned by the end of third-quarter 2012. Completion of all three plants could add up to 1.6 Bcf per day of new processing capacity in addition to over 300 miles of 16- to 20-inch pipeline in place.

DCP Midstream is currently engaged in the construction of a 720-mile, 20-inch natural gas liquids Sand Hills Pipeline, which will ultimately move up to 350,000 barrels per day of new NGL capacity from the Permian Basin in West Texas and Eagle Ford in South Texas before terminating in Mont Belvieu.

Bill Moler, chief operating officer of Inergy Midstream LP, agreed that the Eagle Ford needs additional midstream assets in place to handle the additional production. For that reason, Inergy acquired the Tres Palacios Gas Storage facility from Natural Gas Services Inc. in October 2010.

Tres Palacios is a high-deliverability, saltdome storage facility in Matagorda County, Texas, about 60 miles southwest of Houston. It has 38.4 Bcf of working gas capacity in three separate caverns and is the closest salt dome storage facility to the Eagle Ford with links to 10 market bound pipelines.

Inergy's clients include power producers, electric and gas utilities, energy traders and marketers. The facility is strategically located near five intrastate and five interstate pipelines.

Inergy is building a fourth cavern, which will have capacity for an additional 9.5 Bcf and is expected to come into service in January 2014. The facility has a maximum withdrawal capacity of 2 Bcf per day and a maximum injection capacity of 1 Bcf per day. Inergy is also pursuing the development of NGL storage in pre-solution mined caverns near Tres Palacios.

"We have space available today that allows Tres to park gas until December or January where values are significantly better. There's value to be had in parking cash gas today until two or three months from now," he said.

Curt Anastasio, chief executive of NuStar Energy LP, said the company has assets in or near the Eagle Ford, Bakken, Granite Wash, Barnett Mississippian and Niobrara shale plays.

In South Texas, NuStar recently reversed an eight-inch pipeline which previously moved products from Corpus Christi to Three Rivers. The line was converted to a crude line and reversed so that it could move Eagle Ford crude to Valero's refinery in Corpus Christi, Texas. NuStar also plans to build 55 miles of new 12-inch pipeline that will connect to its existing pipeline segments. It expects to move crude and condensate from Corpus Christi to Valero's Three Rivers refinery.

Anastasio said NuStar signed letters of intent with TexStar Midstream Services LP and Velocity Midstream Partners LLC to develop pipelines to move crude and condensate to Three Rivers, Texas, where NuStar will build a new storage facility. That project should be complete by second-quarter 2012.

In addition, NuStar plans to construct a new three-bay truck rack for crude offloading at its Elmendorf storage facility and a new 12-mile, 8-inch crude pipeline from the facility to its refinery in San Antonio. The project, which has capital expenditures of about $20 million, is expected to be complete in first-quarter 2012. Once complete, Anastasio said he expects the pipeline to reduce transportation costs and improve the crude supply for its refinery.

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