Kinder Morgan Energy Partners (NYSE: KMP) today announced plans to build a new CO2 pipeline spanning from Arizona to New Mexico, which will result in an investment of $1 billion in the states.

The 213-mile Lobos Pipeline will begin in the company's St. Johns source field in Apache County, Ariz., and stretch to the Kinder Morgan-operated Cortez Pipeline in Torrance County, N.M. It is estimated to have an initial per-day capacity of 300 million standard cubic feet, and will be used to support both current and future efforts of Kinder Morgan and other companies in their enhanced oil recovery (EOR) projects in the Permian Basin of West Texas and eastern New Mexico.

Following approval from environmental and regulatory agencies, Kinder Morgan Energy Partners expects the project to be in service by the third quarter of 2016.

"This project will help address the market's growing demand for CO2 and enable Permian Basin producers to increase oil production by using the product in EOR projects," James Wuerth, president of Kinder Morgan Energy Partners' CO2 group, said in a press release. "EOR is measurably increasing the nation's recoverable oil supply and will continue to do so in the future."

As a result of the project, Kinder Morgan Energy Partners plans to invest $700 million in the St. Johns field for drilling wells and to build field gathering, treatment, and compression facilities. The remaining $300 million of the estimated investment will be used to build the pipeline itself. The company said this project will employ approximately 1,200 contractors.


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