DCP Midstream LLC is in the process of doubling its natural gas processing capacity in the Denver-Julesburg (DJ) Basin by the end of 2014 as drilling and completion technologies unlock more gas, the company said.

In total, DCP plans to increase its gathering and processing assets in the DJ Basin to nine gas processing plants with a total capacity of about 800 MMcf/d and natural gas liquids (NGL) production of 70,000 b/d.

“The Denver-Julesburg Basin continues to reinvent itself, and the introduction of horizontal drilling is uncovering associated natural gas discoveries in the Niobrara Shale and Codell formations,” said DCP Midstream’s Wouter van Kempen, president of the gathering and processing business. “In this new phase of oil-driven development, volumes and infrastructure needs are accelerating.”

According to NGI’s Shale Daily Unconventional Rig Count, drilling in the Niobrara-DJ Basin is up 180% from a year ago as of Aug. 3. Last week there were 14 rigs active, a 40% increase from a month ago.

While projects making up the effort have been announced or are under way, Monday’s announcement by DCP Midstream “should be welcomed by basin observers,” said Wells Fargo Securities analyst David Tameron on Tuesday. “We think the projects are a long-term vote of confidence on behalf of DCP and view the announcement as positive for the longer-term growth capability of DJ Basin operators…” These include Noble Energy Inc., Anadarko Petroleum Corp., Encana Corp., PDC Energy Inc., Bill Barrett Corp., Synergy Resources Corp. and Bonanza Creek Energy Inc., Tameron said.

DCP Midstream recently broke ground on the LaSalle Plant in Weld County, CO, with a capacity of 110 MMcf/d and a completion date in the second half of 2013 in coordination with the start-up of the Front Range NGL pipeline (see Shale Daily, May 16, 2011). DCP is constructing two compressor stations, with one to the north and one to the west of the LaSalle Plant, and an associated gathering system, which are also expected to be in-service by the second half of 2013. It also plans to reconfigure some of the plant operations and equipment.

The company received a revised air permit from the state of Colorado last month enabling operation of the Mewbourn II Plant, west of Platteville in Weld County, at its full design capacity of 160 MMcf/d, effectively increasing operational throughput in the plant by 35 MMcf/d this summer. DCP has recently filed for a permit to build and operate the Lucerne II Plant, northeast of Greeley in Weld County, with a maximum capacity of 230 MMcf/d, and separate additional gathering system improvements including up to four compressor stations, with estimated service of those facilities by late 2014.

In addition to new processing capacity, DCP plans to improve reliability by extending the high-pressure gathering system grid connected to its processing plants. The company said it is creating a “super system” in Weld County, or a broad network of gathering and processing facilities, which afford “significant” optionality and flexibility.

The recently announced Front Range pipeline is expected to also help producers in the DJ Basin maximize the value of their NGL production by providing connectivity to the premium Mont Belvieu, TX, market, the company said (see Shale Daily, April 13). DCP, Enterprise Products Partners LP and Anadarko Petroleum are building an interstate NGL pipeline that would originate in Weld County. Initial capacity on Front Range is expected to be about 150,000 b/d, which could be expanded to 230,000 b/d. Connectivity to Mont Belvieu includes transportation via the recently announced Texas Express Pipeline, in which DCP Midstream Partners LP has acquired a 10% interest.

“To meet increased infrastructure needs in the basin, DCP is planning to double its processing capacity in the region by the end of 2014. By building a one-stop services company — including gathering, processing, NGL transportation and fractionation services — DCP will provide producers with full value chain service to accommodate their aggressive growth plans,” said Spectra Energy Corp. CEO Greg Ebel, whose company is a partner in DCP Midstream with Phillips 66.