Under the terms of the arrangement, SM Energy will commit Eagle Ford production up to a maximum level of 200,000mmbtu per day over a ten year term. Eagle Ford Gathering will construct a pipeline to serve SM Energy’s Eagle Ford assets in La Salle, Dimmit, and Webb counties, Texas.
The pipeline is expected to be in-service during the summer of 2011. The gas will be gathered through the new Eagle Ford Gathering pipeline and transported on Kinder Morgan’s Laredo-to-Katy pipeline to Copano’s Houston Central plant where the gas will be processed. The agreement with SM Energy is fee-based and will not require the company to invest any upfront capital.
Tony Best, president and CEO of SM Energy, said: “Our agreement with Eagle Ford Gathering is a logical next step in our effort to secure transportation and processing for our assets in the Eagle Ford shale.
“The take-away volumes covered by this agreement, combined with our existing downstream infrastructure arrangements, match our planned production volume ramp-up over the next several years. This arrangement is also consistent with our strategy of having multiple outlets and markets for our gas while providing strong reliable markets for our NGLs.”
