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New NGL Pipeline Would 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 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 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 week-ago period. 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 Shale Daily, Nov. 16, 2011).

The Front Range project's in-service is expected during 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 Shale Daily, March 7; Sept. 7, 2011). 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 (see Shale Daily, Aug. 10, 2011), including liquids from the Marcellus Shale (see Shale Daily, Jan. 5).

"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."

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 on 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 will each own a 35% interest in the venture, while Anadarko will 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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