Tejas, Enterprise Eye Expanding NGL Lines
Depressed gas liquids prices don't affect the need for
additional liquids transportation capacity in the Gulf of Mexico
region in the view of two companies that last week joined to expand
Louisiana pipeline facilities.
Shell Oil affiliate Tejas Natural Gas Liquids LLC and Enterprise
Products Partners L.P. formed joint venture Entell NGL Services LLC
to develop a gas liquids transportation and distribution system.
Entell's initial asset base will include substantially all of
Enterprise's existing pipeline facilities in Louisiana. In
addition, Entell will create a pipeline system linking storage at
Breaux Bridge, LA, to Mont Belvieu, TX. Entell anticipates the
system being capable of distributing products from key NGL sources
in southern Louisiana directly to major NGL markets, including the
lower Mississippi River corridor, Dixie pipeline, Lake Charles, LA,
and Mont Belvieu.
Entell is a limited liability company in which Enterprise and
Tejas each have a 50% interest. Entell owns 250 miles of pipe
connecting several market centers in Louisiana, with the capacity
to move 80,000 barrels/d. Planned expansions will boost that number
to more than 110,000 barrels/d.
"The synergies that Tejas' growing NGL production and
Enterprise's asset base bring to Entell support Tejas' desire to
grow its downstream NGL storage and distribution systems both
within the Louisiana market and through linkage to Mont Belvieu,"
said Curtis Frasier, executive vice president of Tejas Energy.
"Enterprise has been a natural gas liquids fractionation,
storage and pipeline service provider in southern Louisiana and
Mont Belvieu, TX, for more than 25 years," said O.S. Andras,
Enterprise president. "Combining our Louisiana pipeline system with
Tejas through Entell creates a link between these two major market
Mike Falco, senior vice president of business management for
Enterprise, said Tejas has been one of the biggest shippers on its
system and predicted with all the development in the Gulf of Mexico
growth on the system will be "significant." Backing from Tejas
makes building/buying a line back to Mont Belvieu more of a
reality. Falco said Entell hopes to accomplish that by the end of
Falco said there are no current plans for similar ventures.
"This is the biggie. We've been working on this for the better part
of the year. This is the alliance that we've chosen and that we
think will work for us."
Tejas Natural Gas Liquids LLC is responsible for processing and
marketing gas liquids from Shell's Gulf of Mexico production. The
company ranks as the largest NGL producer in South Louisiana.
Facilities operated by Enterprise at Mont Belvieu include one of
the largest NGL fractionation and MTBE production facilities and
the largest butane isomerization complex in the United States and
two propylene fractionation units.
The company also owns and operates a network of about 500 miles
of pipeline throughout the Gulf Coast and a fractionation facility
in Petal, MS, with capacity of 7,000 barrels per day. The
partnership leases and operates one of only two commercial NGL
import-export terminals on the Gulf Coast and NGL storage wells
with about 35 million barrels of capacity.
Last month Royal/Dutch Shell Group said it plans to sell 40% of
its chemicals business and take a related fourth quarter $4.5
billion after-tax charge as part of a major restructuring. Other
assets to be sold include Transok, the 6,500-mile Oklahoma
intrastate gas transmission and gathering system that Shell
subsidiary Tejas Gas bought in May 1996. Tejas paid $890 million
for Transok, which makes it one of the largest midstream
transactions ever completed. In a statement issued by Tejas last
month, the company said it would "immediately initiate a
competitive sales process, with an anticipated closing of the
transaction in the first half of 1999."
Tejas said the sale is "consistent with the recognition that the
long-term success of our midstream business is dependent on
capturing the key synergies between Tejas, Coral and Shell's
producing assets. We view our Gulf Coast transportation, storage
and NGL operations as the assets best aligned to complement Coral's
industrial marketing activities and the growth of our power
generation business. The sale of Transok will enhance our capital
resources and our capability to concentrate on these synergies."
Joe Fisher, Houston