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Trio's NGL Pipe to Tie DJ Basin to Gulf Coast Market

Enterprise Products Partners LP, Anadarko Petroleum Corp. and DCP Midstream LLC plan to construct a natural gas liquids (NGL) pipeline from the Denver-Julesburg (DJ) Basin in Weld County, CO, to Skellytown, TX, in Carson County. Initial capacity of the y-grade Front Range Pipeline is expected to be 150,000 b/d.

The project would give DJ Basin NGL production access to the Gulf Coast, the largest NGL market in the country, the partners said last Thursday. "The Front Range project is anchored by NGL volumes produced from facilities operated by affiliates of Anadarko and DCP Midstream," said Enterprise CEO Michael A. Creel, who noted that the project would extend his company's pipeline network into the DJ Basin.

"With the success and significant growth expected in Anadarko's liquids-rich Wattenberg HZ (horizontal) program, Front Range will provide needed access to premium markets, which enables us to capture the highest wellhead netbacks," said Anadarko's Danny Rea, vice president of midstream. "When combined with the recent announcement by Western Gas Partners, LP to construct the Lancaster Plant in the DJ Basin, Front Range provides significant value to Anadarko and its stakeholders."

According to NGI's Shale Daily Unconventional Rig Count, the Niobrara-DJ Basin is still in bloom with 11 rigs running as of April 6, up one from the prior week. One year ago there were only four rigs running in the play. Late last year Anadarko and Noble Energy Inc. were both touting the liquids potential of the region (see NGI, Nov. 21, 2011).

"The DJ Basin for several years has been an attractive liquids-rich resource," said DCP Midstream's Bill Waldheim, president of the company's gas and crude oil logistics business. "Now, with the introduction of horizontal drilling and this new phase of oil-driven development, the volumes and the infrastructure needs are accelerating. In anticipation of growing volumes, DCP remains focused on the liquids transportation needs of the basin. Given the plant development under way in the DJ, DCP has a strategic need to provide open access transportation services to the higher-valued Mont Belvieu [TX] market."

The Front Range project's in-service is expected in the fourth quarter of 2013. Enterprise is to construct and operate the 435-mile line and each of the three partners will hold a one-third interest. The project could be expanded to 230,000 b/d. Front Range is to connect with Enterprise's existing Mid-America Pipeline (MAPL) and the recently announced Texas Express Pipeline (see NGI, March 26). These assets are components of a wider Enterprise strategy predicated on tapping liquids in shale plays and delivering them to customers via the Gulf Coast, including liquids from the Marcellus Shale via Enterprises proposed Appalachia-to-Texas (Atex) Express ethane pipeline (see NGI, Feb. 6).

Enterprise is talking with customers to develop an ethane header project that would serve Gulf Coast petrochemical customers with just-in-time deliveries of ethane from the companies ethane storage at Mont Belvieu, Enterprise Senior Vice President Jim Collingsworth told NGI.

"The majority of that is using existing pipe, and that header will extend from Corpus Christi [TX] east to the Mississippi River in New Orleans, that area, Baton Rouge," he said. "It will be an ethane-only pipeline and we will allow petrochemical companies to connect to it and we call 'drink upon demand.' If they want 10,000 b/d, they suck 10,000 out; if they want 15,000 they can go to 15,000. It's kind of an on-demand pipeline, which provides a lot of benefits to them when you think about managing inventory costs. Feedstocks are their biggest single cost. So with this header system they ought to be able to pare their inventory down some."

Contract talks with prospective customers are advancing, Collingsworth said. "We are very optimistic about our ability to get this system contracted out and put in place." From the time of the project announcement, it will take 18-24 months to complete, he said. "We're working draft contracts with our customers. We're past draft one," he said.

A binding open season for Front Range capacity currently runs through May 14. Information is available from Buford Barr at (713) 381-8354, or bbarr@eprod.com; as well as Bryan McFarland at (713) 381-2468, or bmcfarland@eprod.com.

Also last Thursday, DCP Midstream said it has acquired a 10% ownership interest in Texas Express from Enterprise for about $85 million. Going forward, Enterprise and Enbridge Energy Partners LP would each own a 35% interest in the venture, while Anadarko would have a 20% stake. Additionally, DCP Midstream affiliate DCP NGL Services LLC has committed 20,000 b/d to Texas Express, increasing total long-term shipper commitments from 232,000 b/d to 252,000 b/d.

Originating near Skellytown, the 20-inch diameter Texas Express mainline would extend 580 miles to Enterprise's NGL fractionation and storage complex at Mont Belvieu and would provide access to other third-party facilities in the area. Production from the Rockies, Permian Basin and Midcontinent are to be delivered into Texas Express through MAPL, which extends north through Oklahoma into Conway, KS, and south into the Permian Basin. Texas Express is expected to be completed by the second quarter of 2013.

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