* To supply 20,000 bpd to Lone Star in Permian Basin
* Plant to have production capacity of 200 mmcf/d
* Construction to be completed in mid-2013 (Follows alerts)
Aug 23 (Reuters) - Pipeline operator Southern Union Co said it would spend $235 million to build a natural gas processing plant in the liquids-rich Avalon shale, as it looks to expand its existing production facilities to meet fast-growing demand.
Located in the Permian Basin, the plant will have a production capacity of 200 million cubic feet per day and is expected to be completed in mid-2013. It will be built by the company's midstream segment, Southern Union Gas Services.
The plant will supply about 20,000 barrels per day (bpd) of natural gas liquids into Lone Star's Permian to Mt. Belvieu pipeline expansion, under a 15-year firm arrangement.
Lone Star NGL LLC is a joint venture between Energy Transfer Partners LP and Regency Energy Partners LP .
Southern Union owns and operates more than 20,000 miles of pipelines in the Southeast, Midwest and Great Lakes regions as well as Texas and New Mexico.
The Houston-based company's shares closed at $41.00 on Monday on the New York Stock Exchange. (Reporting by Sumit Jha in Bangalore; Editing by Viraj Nair)