DCP Midstream LP is mounting another expansion of its Sand Hills natural gas liquids (NGL) pipeline to serve production from the Permian Basin.
Denver-based DCP said the expansion is designed to increase capacity by 85,000 b/d to about 450,000 b/d. The initial phase is expected to include partial looping of the pipeline and the addition of seven pump stations at cost of about $500 million. In-service is expected during the second half of 2018.
Additionally, future phased expansion may entail adding a full loop of Sand Hills, which could increase capacity by more than 100,000 b/d to a minimum of 550,000 b/d.
This latest project is in addition to an ongoing expansion to 365,000 b/d, which is on target to be in service in the fourth quarter, DCP said. The ongoing expansion includes three pump stations and a lateral to primarily increase Permian capacity. It is backed by long-term, third-party plant dedications, DCP said, adding that multiple new supply connectors are in progress and will deliver incremental NGL volumes this year and beyond.
Sand Hills provides NGL takeaway capacity to the Mont Belvieu, TX, market from both company-owned and third-party plants in the Permian, including Southeast New Mexico, Delaware sub-basin and Cline Shale in West Texas.
“DCP is uniquely situated through its premier integrated logistics and [gathering and processing] footprint to capture growth out of the Delaware and Permian basins,” said CEO Wouter van Kempen.
Proceeds from DCP’s recent divestiture of its noncore Douglas, WY, natural gas gathering system to Tallgrass Midstream LLC would partially fund the initial phase of the new expansion. Sand Hills Pipeline is owned two-thirds by DCP, and one-third by Phillips 66 Partners LP.
DCP’s latest expansion joins multiple other projects targeting Permian NGLs.
Earlier in the week Targa Resources Corp. said it plans to build a $1.3 billion NGL pipeline to connect the Permian and the company's North Texas gathering system to its fractionation and storage complex at the NGL market hub at Mont Belvieu. Additionally, Apache Corp. said recently it plans to complete an NGL pipeline in the Permian by 2019. And Enterprise Products Partners LP recently announced plans to build the 571-mile, 24-inch diameter Shin Oak NGL pipeline, which would run from its Hobbs fractionation and storage facility in Gaines County, TX, to Mont Belvieu. Shin Oak would have an initial capacity of 250,000 b/d, but would be expandable to 600,000 b/d.
DCP recently agreed to participate in the development of Kinder Morgan Texas Pipeline LLC’s proposed Gulf Coast Express Pipeline Project, which would provide an outlet for increased natural gas production from the Permian to markets along the Texas Gulf Coast.