Kinder Morgan Energy Partners, L.P. and Copano Energy have entered into a letter of intent for a 50/50 joint venture to provide gathering, transportation and processing services to natural gas producers in the Eagle Ford Shale resource play in south Texas. The joint venture will construct, as a first phase, an approximately 22-mile, 24-inch natural gas gathering pipeline and will enter into new commercial arrangements with Kinder Morgan and Copano Energy. The natural gas pipeline will originate in LaSalle County, Texas, and terminate in Duval County, Texas, and will have an initial capacity of 350 million cubic feet per day. The pipeline is expected to be completed in mid-year 2010.

The letter of intent contemplates, and the joint venture is subject to, negotiating an extension of existing contracts between Copano Energy and Kinder Morgan, including their processing and transportation agreements. The transactions reflected in the letter of intent are subject to the execution of definitive agreements and the receipt of any required approvals.

"This new alliance will provide seamless bundled gathering, processing and transmission services to Eagle Ford Shale producers through the combination of our companies' immediately available pipeline and processing capacities," said Tom Martin, president of Kinder Morgan's Texas Intrastate Pipelines. "This new pipeline is the first step to expand our combined network in support of Eagle Ford Shale development."

"Since the inception of Copano's South Texas business model in August 2001, our commercial alliance with Kinder Morgan has played a key role in the growth of our midstream services business," said Bruce Northcutt, Copano Energy's President and Chief Operating Officer. "We look forward to strengthening this relationship through the new joint venture."

Tags: Copano Energy, Kinder Morgan Energy Partners, L.P