HOUSTON--(BUSINESS WIRE)--Kinder Morgan Energy Partners, L.P. (NYSE: KMP) today announced it has entered into five new CO2 sales contracts during the first quarter that combined total more than 2 trillion cubic feet with aggregate daily contract quantities exceeding 440 million cubic feet per day (MMcfd) at their peak. These volumes, the great majority of which is contracted by third-parties, will support new and existing CO2 flood projects operated by the purchasers in the Permian Basin of West Texas and have a volume weighted average term of nearly 16 years.
“CO2 continues to be in strong demand, as enhanced oil recovery operations are increasing in response to sustained higher oil prices,” said CO2 President Tim Bradley. “As a result, we are realizing excellent opportunities to expand our CO2 operations and bring much needed supply to our customers.”
Bradley noted that one of the contracts includes transporting CO2 via Kinder Morgan’s 91-mile Eastern Shelf Pipeline to a project near the company’s Katz Field. The contract will commence in 2014 and is expected to increase CO2 transported via the pipeline to more than 130 MMcfd, which will require additional pump stations to bolster capacity.
In response to increasing CO2 demand, Kinder Morgan is working on a previously announced $255 million expansion at its Doe Canyon Unit CO2 source field in southwestern Colorado to increase capacity from 105 MMcfd to 170 MMcfd. The expansion will include installation of both primary and booster compression with construction beginning in the second quarter this year. The primary compression is expected to be in service in the fourth quarter of 2013 and the booster compression is targeted to be complete in the second quarter of 2014. The company also plans to drill 19 more wells during the next 10 years, which will increase production from 105 MMcfd to 170 MMcfd.
Additionally, Kinder Morgan recently closed on its previously announced acquisition of the St. Johns CO2 source field and related assets located in Apache County, Ariz., and Catron Country, N.M. Well testing and predevelopment activities are underway for this potential new source field.
Kinder Morgan Energy Partners, L.P. (NYSE: KMP) is a leading pipeline transportation and energy storage company in North America. KMP owns an interest in or operates approximately 29,000 miles of pipelines and 180 terminals. Its pipelines transport natural gas, gasoline, crude oil, CO2 and other products, and its terminals store petroleum products and chemicals and handle such products as ethanol, coal, petroleum coke and steel. KMP is also the leading provider of CO2 for enhanced oil recovery projects in North America. One of the largest publicly traded pipeline limited partnerships in America, KMP and Kinder Morgan Management, LLC (NYSE: KMR) have an enterprise value of over $40 billion. The general partner of KMP is owned by Kinder Morgan, Inc. (NYSE: KMI). Combined, KMI, KMP and KMR constitute the largest midstream energy entity in the United States with an enterprise value of over $65 billion. For more information, please visit www.kindermorgan.com.
This news release includes forward-looking statements. Although Kinder Morgan believes that its expectations are based on reasonable assumptions, it can give no assurance that such assumptions will materialize. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein are enumerated in Kinder Morgan’s Forms 10-K and 10-Q as filed with the Securities and Exchange Commission.