February 22, 2013 [OPIS] - Kinder Morgan Energy Partners LP said on Thursday that KW Express LLC, a partnership between KMP and Watco Companies LLC, has entered into a long-term agreement with Mercuria Energy Trading Company Inc., to construct a 210,000-b/d crude-by-rail project at the Greens Port Industrial Park on the Houston Ship Channel.
“This will be the first major crude by rail destination facility in the Houston area with the ability to deliver into the largest refining complex in the world,” said John Schlosser, Kinder Morgan Terminals president.
“It will provide U.S. and Canadian producers much needed market access and optionality to deliver their crude oil production,” he said.
The project will allow Mercuria Energy Trading Inc. to source crude from various origination locations including Cushing, Okla., West Texas, the Bakken shale area and western Canada for delivery by rail into the Houston Ship Channel for distribution to various refiners via pipeline and barges.
The facility will have the capability to unload and load up to three unit trains per day of crude oil and condensate as well as provide for up to 100,000 b/d of barge-loading capacity.
KW Express will own 85% of the project and, together with Watco, construct and operate the project once completed. Mercuria will own the remaining 15% interest of the project.
Kinder Morgan and Watco first got together to work on crude-via-rail projects in the Midwest and on Gulf Coast in early 2011.
The two companies constructed rail transload facilities in several North Dakota markets, as well as in Stroud, Okla., and Houston, Texas, as well as in locations in the Eagle Ford Shale area in south Texas.
A facility in Dore, N.D., began operations on Sept. 1, 2011 and is able to provide unit trains that send crude to Cushing, Okla., by October.
