NuStar and Velocity sign LOI to develop pipeline for Eagle Ford condensate

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28 June 2011, Oil, LPG

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Velocity will build and operate a new 70-mile, 12-inch pipeline with the capacity to move over 100,000 barrels per day of condensate from Gardendale to Oakville, Texas. Velocity's 12-inch pipeline will interconnect with NuStar's new Oakville Storage facility near Three Rivers, Texas.

This storage facility will be connected to NuStar's existing 16-inch pipeline, which has the capacity to transport approximately 200,000 barrels per day of crude and condensate into NuStar's Corpus Christi North Beach Terminal.

The North Beach terminal has approximately two million barrels of storage capacity, large-scale marine loading facilities, and access to several Corpus Christi refinery markets. NuStar also has a land lease option for 15 acres contiguous to the existing property, which will provide terminal expansion capabilities.

Velocity is currently constructing 65 miles of pipeline and 150,000 barrels of storage to transport condensate to Velocity's Gardendale Terminal for producers, including Shell E&P, Chesapeake, SM Energy and Rosetta Resources.

The addition of the NuStar partnership allows Velocity to quickly offer these and other producers a downstream solution to transport condensate from the Gardendale Terminal to end markets with strong purchaser demand. Construction of Velocity's 12-inch pipeline and NuStar's Three Rivers storage facility will begin this summer and the system is expected to be in service by April of 2012.

"We are pleased to be partnering with NuStar on this transportation project. Given the steep ramp in condensate production, the western portion of the Eagle Ford Shale has an immediate need for transportation solutions to the Gulf Coast markets," said Rick Wilkerson, president of Velocity Midstream.

"Given the difficult trucking conditions, it is the next 18-24 months that our customers are most concerned about. Several crude oil projects have been announced and will be needed, however, the Velocity - NuStar system will offer producers a near-term solution for transportation of condensate directly to Corpus Christi markets and other markets accessible from Corpus Christi."

Source: Datamonitor

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