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Kinder Morgan Energy Partners L.P. (KMP) yesterday announced KW Express L.L.C. has entered into a long-term agreement with Mercuria Energy Trading Company Inc. to construct a crude-by-rail facility at the Greens Port Industrial Park in Houston. KW Express is a partnership between KMP and Watco Cos. L.L.C.

The facility will be designed to handle 210,000 barrels of crude oil per day. The project will enable Mercuria Energy Trading to source crude from various origination locations, including Cushing, Okla., west Texas, the Bakken Shale area and western Canada. Crude will be delivered by rail into the Houston ship channel for distribution to various refiners via pipeline and barges.

The facility will be capable of unloading and loading up to three unit trains per day of crude oil and condensate, as well as feature up to 100,000 barrels per day of barge loading capacity, KMP officials said in a press release. KW Express will own 85 percent of the project and work with Watco to construct and operate the facility. Mercuria Energy Trading will own the remaining 15 percent stake.

"This will be the first major crude-by-rail destination facility in the Houston area with the ability to deliver into the largest refining complex in the world," said Kinder Morgan Terminals President John Schlosser.

Watco's Greens Port Industrial Park is located on 655 acres in the heart of the Houston ship channel in Harris County, Texas. Greens Port is served by the Port Terminal Railroad, which interchanges with BNSF Railway Co., Kansas City Southern and Union Pacific Railroad.