Monday, February 27, 2012

New oil-gas rail terminal on tap for Texas

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Kinder Morgan Energy Partners, L.P. and Martin Midstream Partners L.P. have formed a joint venture, Pecos Valley Producer Services LLC, to develop a rail terminal in Pecos, Tex., to serve the growing oil and natural gas industries in the Permian Basin.

The facility will be constructed and operated by a subsidiary of Watco Companies, Inc., a short line railroad company in which KMP holds a preferred equity position. The joint venture partners said they said in an announcement Monday that they will offer "immediate NGL storage, takeaway, and fractionation services, and seek to develop natural gas and crude gathering and processing systems within the area."

Additionally, the joint venture has held initial discussions to develop a frac sand unit train terminal. The first stage of the terminal is expected to be operational by May 2012. Crude oil, natural gas liquids, frac sand, pipe, tube, structural steel, rig mats, and other commodities can be railed in and out, and transloaded to truck for delivery to the surrounding area.

Once the terminal has been fully developed, it will encompass approximately 85 acres and will be able to support unit trains. Total railcar capacity is anticipated to be 300 to 600 cars per day based on demand.