TEAK Midstream, L.L.C. announced the company has begun operation of more than 250 miles of natural gas gathering and residue delivery pipelines and the adjoining Silver Oak 200 million cubic feet per day (MMcf/d) cryogenic gas processing plant in South Texas to better serve gas producers operating in the Eagle Ford Shale play and surrounding area.
TEAK also announced it recently executed long-term gathering and processing agreements with Comstock Resources, Inc. (NYSE: CRK) and another major Eagle Ford Shale producer that support the facilities. TEAK had signed contracts with anchor shippers Talisman Energy USA Inc. and Statoil Natural Gas LLC earlier this year, as previously announced. TEAK plans to expand the gas processing capacity on its system by 200 MMcf/d by the first quarter of 2014 based on volume commitments to date and increasing demand to process liquids-rich gas from the Eagle Ford play, as well as from the Buda, Pearsall, Olmos and Escondido formations.
Early indicators of the Silver Oak plant’s operational performance show that the facility is capable of generating some of the highest recoveries of natural gas liquids (NGL) from producers’ gas streams in South Texas. Silver Oak, located near the community of Pettus, is equipped with state-of-the-art technology and equipment designed specifically to handle higher concentrations of liquids-rich gas.
TEAK’s new facilities include two inlet high-pressure gas gathering systems. One system consists of 178 miles of 24-inch and 16-inch diameter pipeline with a capacity of approximately 600 MMcf/d. This system originates in Dimmit County on the western edge of the Eagle Ford play and moves rich gas production east through Webb, La Salle, McMullen and Live Oak counties to TEAK’s Silver Oak plant in Bee County. TEAK jointly owns this gathering system with TexStar Midstream. The second system consists of 22 miles of 20-inch diameter pipeline with a capacity of approximately 400 MMcf/d. This TEAK-owned gathering system moves rich gas production from the prolific Karnes County area to the Silver Oak plant.
TEAK’s new pipeline system also includes approximately 57 miles of 20-inch diameter residue gas pipeline that will deliver dry gas from the Silver Oak plant to six major downstream intrastate and interstate pipelines – Tennessee Gas Pipeline, Channel, Kinder-Tejas, Transco, Texas Eastern and NGPL. Additionally, TEAK has constructed approximately three miles of 12-inch diameter NGL pipeline that transport liquids recovered at the Silver Oak plant to the DCP Sand Hills NGL pipeline. The Sand Hills pipeline ultimately delivers NGL to the Mont Belvieu fractionation complex and other fractionation facilities along the Gulf Coast.
“TEAK is well positioned to serve new and existing customers who are pursuing liquids-rich gas in the Eagle Ford and other formations in South Texas. The proximity of our extensive gas gathering systems to escalating drilling activity is ideal, and our processing plant has extremely high NGL recoveries, making it one of the most efficient facilities in the region, which can improve wellhead value for our customers,” said TEAK Co-Chief Executive A. Chris Aulds.
“We also offer competitive and reliable NGL solutions to better serve our customers. We are very satisfied that our Silver Oak plant and gathering systems are helping producers meet their growing midstream needs and efficiently moving their products to market.”
“The increased demand for additional diverse, reliable midstream services in the Maverick Basin along the western edge of the Eagle Ford play prompted TEAK and our partner TexStar Midstream to expand our jointly owned gathering system 45 miles further west beyond its original destination,” said TEAK Co-Chief Executive Jim Wales. “This project reflects the rapid growth of liquids-rich gas production in South Texas and now strategically positions our 200-mile gathering system across seven core producing counties. We are extremely pleased to have Talisman, Statoil, Comstock and others as customers and want producers to know we have additional short- and long-term capacity available on our system.”
TEAK’s new facilities enhance the company’s asset base in South Texas beyond its existing 325-mile low- pressure Texana gathering system in South and East Texas, which the company acquired in July 2010.