New US oil and gas rail terminal

Kinder Morgan Energy Partners (KMP) and Martin Midstream Partners have formed a joint-venture, Pecos Valley Producer Services, for the purpose of developing a multi-commodity rail terminal in Pecos, Texas. KMP says that the new terminal will serve the growing oil and natural gas industries in the Permian Basin. The facility will be constructed and operated by a subsidiary of shortline railroad group Watco Companies. KMP holds a preferred equity position in Watco. The first stage of the terminal is expected to be completed and operational by May 2012.

“The terminal will offer a variety of services to producers in the Permian Basin including crude oil hauling, storage, transloading and marketing,” says KMP. “It will also provide producers access to light Louisiana sweet crude oil markets. Kinder Morgan and Martin Midstream Partners will offer immediate NGL storage, takeaway, and fractionation services, and seek to develop natural gas and crude gathering and processing systems within the area. Crude oil, natural gas liquids, frack 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.”

KMP says that 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 per day, based on demand. The terminal is located along the Pecos Valley Southern Railway and directly adjacent to the Union Pacific railroad main line in the city of Pecos.

The announcement follows another by KMP that it has entered into an arrangement to create an ethanol distribution rail route from Midwest ethanol producers to Tampa, Florida. KMP is involved in the project through a public-private partnership along with the Tampa Port Authority (TPA) and railroad CSX. KMP says the project will constitute the US’ “first ethanol unit-train- to-pipeline distribution system.” “The joint intermodal project involves TPA building new rail track and support infrastructure to handle 100- car unit-train deliveries and a multi-product unit- train offloading yard at Hooker’s Point, in the Port of Tampa. The new rail facilities will allow CSX to transport ethanol from Midwest US producers to central Florida. The unit-trains will then be able to be offloaded within a 24-hour period into Kinder Morgan’s Tampa terminal, where the material will be distributed to numerous blend terminals and to new markets via pipeline.”

www.kindermorgan.com