Kinder Morgan Energy Partners LP (KMP) and Martin Midstream Partners LP (MMLP) announced a new joint venture, Pecos Valley Producer Services LLC, to develop a multi-commodity rail terminal in Pecos TX. The new terminal will include truck-rail transloading service and will serve the growing oil and natural gas industries in the Permian Basin.
The facility will be constructed and operated by a subsidiary of Watco Companies, Inc, one of the the largest privately held short line railroad companies in the United States. KMP holds a preferred equity position in Watco.
Duane Kokinda, president of Kinder Morgan Texas Pipeline LLC, says: “KMP is excited for the opportunity to join with Martin Midstream and Watco to develop this opportunity in the Permian Basin. We believe this unique partnership will provide a wide range of services and expertise for the benefit of customers in Reeves County and surrounding areas, while expanding each company’s footprint in this very active rich gas shale play.”
Ruben Martin, president and chief executive officer of MMLP, says: “We are pleased to be involved with quality partners in the formation of this joint venture. This project represents another strategic transloading facility offering truck to rail logistics, one of MMLP’s core competencies.”
The terminal will offer a variety of services to producers in the Permian Basin including crude oil hauling, storage, transloading, and marketing. It also will provide producers access to light Louisiana sweet crude oil markets. Kinder Morgan and Martin Midstream Partners will offer immediate natural gas liquids storage, takeaway, and fractionation services, and seek to develop natural gas and crude gathering and processing systems within the area. Additionally, the joint venture has held initial discussions to develop a frac sand unit train terminal to service Reeves County and surrounding counties.
The first stage of the terminal is expected to be completed and operational by May. Crude oil, natural gas liquids, frac sand, pipe, tube, structural steel, rig mats, and other commodities can 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 approximately 85 acres and will be able to support unit trains. Total railcar capacity is anticipated to be 300 to 600 per day based on demand. The terminal is strategically located along the Pecos Valley Southern Railway (PVS) and directly adjacent to the Union Pacific mainline in the city of Pecos, and will offer scalability and convenience for local area producers.