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Expansion of the Koch Oil & Gas Pipeline in Texas

The rapid pace of construction of new oil and gas pipelines to transport current energy production in Texas and North America continues. In fact, there has been an explosion of pipeline development in Texas. According to a recent study the industry needs to invest $200 billion nationally in capital for pipelines, storage and other facilities to meet demands from shale oil and gas by 2035. One example is River Rock Energy LLC, based in San Antonio, Texas, that has committed $125 million to fund logistics and infrastructure for the oil and gas industry, including the development of pipelines, railways and storage. The money comes from the private equity firm EnCap Flatrock Midstream. Wood Mackenzie, an energy research firm, expects about $23 billion in investment in the Eagle Ford shale alone, which is less than the $28 billion last year. The difference according to Wood Mackenzie is due to increased efficiency.

Recently, Koch Industries Inc., headed by the well-known conservative political donors Charles Koch and David Koch, announced that its subsidiary Koch Pipeline Co. LP plans to build a 24 mile, 16 inch pipeline in San Patricio County, Texas that is expected to be in service by the second quarter of 2014. Koch Pipeline has not released information on the cost of this new project.Koch Pipeline is based in Wichita, Kansas and already has about 4,000 miles of pipelines in six states including Texas, Wisconsin, Minnesota, Missouri, Iowa and Illinois. Koch’s pipelines transport a number of products, such as crude oil, refined products, ethanol, natural gas, and chemicals. The new pipeline will have a capacity of 200,000 barrels per day of crude oil and will expand Koch’s South Texas crude oil pipeline system. Their South Texas infrastructure already has 540 miles of pipeline to move crude oil to Corpus Christi’s Flint Hills Resources refinery, which is also affiliated with Koch Industries. The refinery processes locally produced crude oil from the Eagle Ford shale and has a capacity of approximately 300,000 barrels of crude oil per day, producing a variety of petroleum products. From the refinery, Koch has pipelines that move crude oil to San Antonio, Dallas, and other markets in Texas.

Koch Pipeline’s senior vice president Bob O’Hair said in a statement that “South Texas is an important area for Koch Pipeline, and we’ll continue to invest in it to ensure we have a system that meets the shippers’ needs in terms of capacity and reliability.” He went on to say that “(w)e are seeing additional opportunities with the Eagle Ford shale play and this new pipeline will help us move domestic crude to the U.S. market more efficiently by using a combination of new and existing pipeline infrastructure.”

This new pipeline builds on Koch Pipeline’s recent Eagle Ford investments. In 2012 a 20 inch crude oil pipeline was built between Pettus, Texas and the refinery in Corpus Christi, Texas. That pipeline can carry 250,000 barrels of crude oil per day.

Obviously, if new pipelines are being laid, landowners will get easement requests from pipeline companies. If you are a landowner and receive a request for an easement from a pipeline company, tell them that you would be glad to talk to them but that you will have the easement reviewed by an oil and gas pipeline attorney and that your attorney will be in touch with them promptly. Then, get the input of an experienced oil and gas pipeline attorney to make sure that your property is properly protected and that you are paid appropriately for the pipeline and any temporary construction areas. These easements often last longer than your lifetime and can have a substantial impact on your property. It makes sense to get professional input on a contract that is this important.

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