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Apache Dedicating Alpine High NGLs to Enterprise

Apache Corp., which is working to secure takeaway options for its surging Alpine High project in West Texas, has inked a long-term agreement that gives Enterprise Products Partners LP 100% of the liquids production.

Enterprise committed to accept a minimum of 205,000 b/d of natural gas liquids (NGL) from Apache’s No. 1 play, which spans 336,000 net acres in a portion of the Permian Basin’s Delaware sub-basin.

The agreement with Enterprise “is another step in supporting our full-field development program and ensuring access to attractive markets for our products,” said Apache’s Brian Feed, senior vice president of Midstream and Marketing.

Apache’s total Permian output between January and March averaged 183,000 boe/d, with total production up 24% year/year. Natural gas volumes climbed 57% year/year and 12% sequentially.

The dedication dovetails with expansions underway by Enterprise to move Permian volumes to the Texas Gulf Coast. The partnership’s Shin Oak pipeline is a 658-mile NGL system, scheduled for completion by mid-2019.  It would initially move 550,000 b/d from Reeves County to Mont Belvieu, Enterprise’s massive gas processing facility near Houston. Apache also has an option for a one-third equity stake in Shin Oak that it could take after the in-service date.

In addition, Enterprise is adding 300 MMcf/d of incremental capacity to its cryogenic gas processing facility under construction near Orla in West Texas.

“Alpine High is an enormous hydrocarbon resource that encompasses rich gas, dry gas and oil-bearing horizons,” said Enterprise’s Jim Teague, CEO of the general partner. “This agreement provides an efficient long-term outlet for the tremendous volume of NGLs that Apache plans to produce from the rich gas window of the play.”

In addition to Enterprise, Apache and ARM Energy Holdings LLC said earlier this month that Salt Creek Midstream LLC was developing a 445,000 b/d NGL header system to serve Alpine High. The system would originate at processing facilities in southern Reeves County and move liquids to Waha, where volumes would interconnect to downstream pipelines providing access on the Texas Gulf Coast at Mont Belvieu and Corpus Christi fractionation facilities.

Enterprise is keen to move more liquids overseas, and the Alpine High NGL volumes would help ensure that. Last month the Houston-based operator purchased a 65-acre waterfront site on the Houston Ship Channel to expand an existing hydrocarbon terminal. Future plans include constructing at least two deepwater docks capable of accommodating Suezmax vessels, which are massive ships that are capable of transiting the Suez Canal.

And earlier this year, Enterprise and Navigator Holdings Ltd. created a 50/50 joint venture for an ethylene export project on the Gulf Coast that could export up to 1 million tons/year. The export facility could be in service by early 2020 and be able to load ethylene at rates of 1,000 tons/hour.

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