Crosstex Energy said it has completed long-term supply commitments to begin with the construction of the first phase of its Cajun Sibon natural gas liquids (NGL) pipeline expansion project in Louisiana and Texas, US.
With contracts recieved for third-party volumes in excess of 60,000 barrels per day, and together with equity volumes, the company expects the new pipeline to begin operations at the project's initial capacity of 70,000 barrels per day.
Phase I includes a 130-mile, 12-inch-diameter pipeline that will be an extension of the existing 440-mile Cajun Sibon NGL pipeline that is connected to Crosstex's Eunice NGL fractionation facilities in south central Louisiana.
The pipeline extension will connect the Eunice fractionation facilities to the Mont Belvieu supply pipelines in East Texas.
Crosstex president and chief executive officer Barry E Davis said the company is focused on executing phases I and II of the Cajun-Sibon projects.
"They substantiate the value of alternatives to the Mont Belvieu fractionation and liquids markets," he added.
As part of the project, the Eunice fractionator will also be expanded from 15,000 barrels to 55,000 barrels of NGL per day, that will see an increase in the company's interconnected fractionation capacity in Louisiana to around 97,000 barrels per day of NGLs.
Phase I facilities, worth $230m, are expected to be operational in the second quarter of 2013.
The pipeline extension allows the company to provide producers and midstream companies an alternative market for their NGL production at Mont Belvieu.
Key customers that have negotiated long-term supply commitments include BP Products North America, Markwest Energy, East Texas Gas Company and TexStar Midstream Services, as well as other major midstream companies.
Crosstex is also finalising engineering work and has begun negotiating long-term agreements for phase II of the project, which would provide a capacity of an additional 50,000 barrels of NGL per day as an alternative to Mont Belvieu.
If implemented, the phase II expansion could be completed in 2014.