HOUSTON (Reuters) - Magellan Midstream Partners (MMP.N) is considering seeking a partner to build a condensate splitter in Corpus Christi, Texas, to process condensate moved from the Eagle Ford shale oil play on its joint-venture Double Eagle pipeline, Chief Executive Mike Mears told analysts on Wednesday.
Mears said in a webcast presentation at the Barclays Energy-Power Conference in New York that Corpus Christi is a natural place for a splitter, as much of the Eagle Ford’s output is condensate and the coastal port city is a stop-off to move that production to other markets.
Liquid condensates are very light hydrocarbons that can be sold as crude oil, as a diluent to blend into heavy crude, or processed in a condensate splitter and sold.
“We’re looking at ways to draw barrels to Corpus Christi,” he said. “We would look at it primarily as a fee-based project with a counterparty.”
The Double Eagle pipeline began moving condensate from the play to Three Rivers in Texas last month. Shipments between Three Rivers and a Magellan terminal in Corpus Christi began in May.
Double Eagle is a joint venture of Magellan and Kinder Morgan Energy Partners KMP.N, which operates the line.
Mears said the condensate-only pipeline allows for a simpler splitter than would be necessary if the pipeline moved both crude and condensate. When mixed, the processing can be more complicated, calling for a more expensive splitter, he said.
Kinder Morgan is building a condensate splitter at its Galena Park terminal along the Houston Ship Channel. The $360 million project, with one phase starting up next year and the second in 2015, would be able to process up to 140,000 barrels per day when complete.
Last year Kinder Morgan started up a 300,000 bpd crude and condensate pipeline that originates in the Eagle Ford to the Galena Park complex.
Reporting by Kristen Hays; Editing by Bernadette Baum and Richard Chang