Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Gabe Moreen - BAS-ML.
Gabe Moreen - BAS-ML
Question on the Katz development here. The $180.0 million, does that cover the cost of the pipeline or does that also cover some of the capital costs of starting up the field itself as well?
Rich D. Kinder
That covers both. That's the 91 miles of 10-inch pipeline and the cost of developing the flood at Katz, all in.
Gabe Moreen - BAS-ML
And do you envision any of the capacity on that line going to third parties? It seems like you alluded to third parties maybe using some of that capacity.
Also in terms of how you think about hedging that commodity risk as you ramp up production.
Rich D. Kinder
From the capacity standpoint, we most assuredly do think there will be other users. We have baked into this project, in the $180.0 million plus for the project, the full cost of the line coming from SACROC over to Katz.
We certainly, the line, we certainly expect to have other customers in that line, third-party customers, and we think that will give us upside to the present case. But that's not in the numbers that we're talking about now.
And we think in fact that, not to overstate it, but actually Tim's here. That pipeline is expandable with very little cost, up to 200.0 million a day. So we can move 200.0 million across there.
There are several adjacent fields to Katz where we have been in discussions with third parties already about servicing them. But obviously we can't do that until we had a base load for the pipeline. Katz now is the base load for that pipeline.
And then we think beyond the Katz deal, which we already own, there may be opportunities to acquire other fields in that general area where we might use some of the additional capacity on that pipeline.
So it's a pretty significant project and one I think that fits very well into our long-term goals for our CO2 segment.
With the hedge, from the hedge question standpoint, we expect to hedge that under our program just as we do SACROC and Yates on a going forward basis.
Gabe Moreen - BAS-ML
On the $100.0 million you have budgeted for Terminals acquisitions, you got a little done in the second quarter, do you still feel pretty good about hitting that $100.0 million for the year?
- To read the full transcript on Seeking Alpha, click here »
