TexStar Midstream Services LP
TexStar Midstream Services LP is in the enviable position of not being able to keep up with its growth. The company’s latest venture involves expanding its capacity to handle the future gas volumes from the Eagle Ford and Buda gas volumes in Texas. TexStar currently owns a 125-mile, low-pressure gathering system in Frio and LaSalle counties, Texas. The company is in the middle of an expansion project that will extend its capacity for gas from 1.2 million cfd of sour gas to more than 30 million cfd by the end of 2010. This initial phase will cost $12 million, according to co-CEO and COO Philip Mezey.
The next expansion will be of the main line crude oil gathering system. More than 40 miles of gathering lines are slated to be installed by the end of 2011, as well as an additional 3,600 horsepower to the existing 1,400 already in place.
The final phase of the project will expand the gas transmission line and boost TexStar Midstream’s capacity for low-pressure gas from 3 million cfd to more than 75 million.
According to the company, a new gas export line to the Three Rivers area of Texas will access multiple pipelines with gas processing capabilities and new gas markets. This pipeline also will provide access for producers in Atascosa and McMullen counties.
“We’re looking at several strategic acquisitions in this area, and they would be midstream gas gathering and crude oil assets in the Eagle Ford play,” Mezey says. “Our focus is on producer services that go back to the wellhead, like gathering, compression and treating.
“Other midstream companies do have some of that, but their focus is more on transmission,” he continues. “Ours has always been directly to the wellhead with the producers.”
Keeping Up with Demand
As TexStar Midstream continues to expand, the company is running into difficulty keeping up with the material and labor resources required to ensure it meets demand.
Mezey explains the company is hiring and training as quickly as possible to make sure TexStar is properly ramped up for expanded capacity. The company trains these new hires through a combination of industry schools and on-the-job instruction from more experienced staff members.
“The biggest thing going on is the large amount of activity in the Eagle Ford play in south Texas and its impact on the availability of people, services and costs,” Mezey says.
“We are rapidly adding people and training them. We are well-established in south Texas, so there is a pretty good resource base of people that know us in the area.”
Vast Experience
TexStar Midstream has vast experience in operating midstream assets in south Texas. The company says it has owned and operated more than 1,500 miles of pipeline as well as two large gas-processing plants. It previously sold its assets valued at approximately $350 million to Regency in 2006, and is currently in the process of rebuilding its strong midstream presence in south Texas, it adds.
“We expect continued growth in midstream sector as far as expanding system capabilities and capacities and particularly in services in the crude oil and condensate transportation,” Mezey says.