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Kinder Morgan Energy Partners And Martin Midstream Partners Announce Rail Terminal Joint Venture In Permian Basin Of West Texas

Stocks in this article: KMP MMLP

Kinder Morgan Energy Partners, L.P. (NYSE: KMP) and Martin Midstream Partners L.P. (NASDAQ: MMLP) today announced a new joint venture, Pecos Valley Producer Services LLC, to develop a multi-commodity rail terminal in Pecos, Texas. The new terminal 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., the largest privately held short line railroad company in the United States. KMP holds a preferred equity position in Watco.

The terminal will offer a variety of services to producers in the Permian Basin including crude oil hauling, storage, transloading and marketing. It will also provide producers access to light Louisiana sweet crude oil markets. Kinder Morgan and Martin Midstream Partners will offer immediate NGL 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 2012. 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.

Once fully operational, the terminal will create up to 45 new jobs. Bill Oglesby, executive director of the Pecos Economic Development Corporation, said, “We welcome Kinder Morgan and Martin Midstream’s announcement of this rail terminal in Pecos. This is a significant step for Pecos and Reeves County, and the development of our oil and gas resources.”

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