KMEP-Martin JV to build Permian crude-NGL rail terminal

Kinder Morgan Energy Partners LP (KMEP) and Martin Midstream Partners LP (MMP) will develop a multicommodity rail terminal in Pecos, Tex., through a new joint venture, Pecos Valley Producer Services LLC. The terminal will offer Permian basin producers crude oil hauling, storage, transloading, and marketing. Kinder Morgan said it will also provide producers access to light Louisiana sweet crude oil markets.

KMEP and MMP will also offer immediate NGL storage, takeaway, and fractionation services, and will seek to develop natural gas and crude gathering and processing systems in the area. The venture has held initial discussions to develop a frac sand unit train terminal as well, servicing Reeves and surrounding counties.

KMEP expects the first stage of the terminal to be operational by May. Crude, natural gas liquids, frac sand, pipe, tube, structural steel, rig mats and other commodities will be railed in and out, and transloaded to truck for delivery to the surrounding area.

Once the terminal has been fully developed, it will encompass roughly 85 acres and be able to support unit trains, said KMEP, which expects total railcar capacity to be 300-600/day based on demand. The terminal will lie on the Pecos Valley Southern Railway, directly adjacent to the Union Pacific mainline in the city of Pecos, and will offer scalability.

A subsidiary of Watco Cos. Inc. will build and operate the facility. KMEP holds a preferred equity position in Watco. The terminal will be Watco’s eighth shale oil crude-by-rail facility (OGJ Online, Mar. 2, 2011).