Haynesville Shale Sees Midstream Investment

By Eric Fox | December 01, 2010 AAA

Investors and the industry may not be bullish on natural gas, but infrastructure is still needed to gather, process and transport the increased production of natural gas. This is especially true in fast growing, emerging shale plays like the Haynesville Shale, where a large amount of development is underway.

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The Players
Energy Transfer Partners LP (NYSE:ETP) just completed and put into service the ETC Tiger Pipeline. This interstate pipeline is 175 miles long and runs from Panola County, Texas to the Perryville Hub in Richland Parish, Louisiana. The pipeline will have an initial capacity of 2 billion cubic feet per day of natural gas and cost the company $1 billion to construct.

Enterprise Products Partners LP (NYSE:EPD) is one of the largest players in this part of the industry, with thousands of miles of pipelines and other assets across the United States. The company is currently building an expansion of the Acadian gas pipeline along with Duncan Energy Partners (NYSE:DEP) to serve the Haynesville Shale.

The expansion will cost $1.56 billion and will be 270 miles in length with an initial capacity of 1.8 billion cubic feet per day. The pipeline is expected to be in service by September 2011, and capacity can be expanded to 2.1 billion cubic feet per day if needed.

Boardwalk Pipeline Partners LP (NYSE:BWP) recently completed an expansion to serve the increased production from the Haynesville Shale. The Haynesville/Perryville Expansion Project added three compressor stations in Louisiana.

The expansion is part of the Gulf South pipeline system, a 7,700 mile natural gas pipeline network with a peak capacity of 6.2 billion cubic feet per day. The system also includes two natural gas storage fields with capacity of 131 billion cubic feet.

In August 2010, Regency Energy Partners LP (Nasdaq:RGNC) finished an expansion of its gathering system that serves the Haynesville Shale. The company added an extra 485 million cubic feet per day of extra capacity to the Logansport Gathering System.

Enbridge Energy Partners (NYSE:EEP) is expanding the company's natural gas gathering system in East Texas that serves the Haynesville Shale. The company will spend $142 million to add capacity of 900 million cubic feet per day to its system.

Other companies are buying into the Haynesville Shale. In May 2010, Kinder Morgan Energy Partners, L.P. (NYSE:KMP) paid $921 million to acquire 50% of the natural gas gathering assets of Petrohawk Energy (NYSE:HK). The two companies formed KinderHawk Field Services LLC to operate these assets, and expects to increase capacity to 800 million cubic feet per day by the end of 2010.

Although natural gas may currently be out of favor, the large amount of previously planned development is still underway as exploration and production companies move to hold acreage in the Haynesville Shale. The industry is also making major investments to gather, process and transport this production. (To learn more, see Accounting For Differences In Oil & Gas Accounting.)

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