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Boardwalk Working Through Newly Expanded Project Slate

After recently bringing online two "major" growth projects, with two more on the way, Boardwalk Pipeline Partners LP (BWP) management on Monday announced three initiatives worth about $65 million that are intended to add end-use markets to the company's natural gas system and grow its liquids-related business.

Two of the three new projects are on Boardwalk Louisiana Midstream, CEO Stan Horton told analysts during an earnings conference call.

"We recently executed new long-term contracts to provide ethylene transportation and storage services to two petrochemical customers in Louisiana," he said. "The first project will provide transportation and storage services at our Choctaw Hub and include transportation on our Evangeline ethylene pipeline. The contract term is 10 years and the expected in-service date is early 2018. The second project is to provide transportation and storage services at the Sulphur Hub. The contract term is 15 years and the expected in-service date is late 2017.

"We also recently completed a successful open season on Gulf South to serve a proposed power generation facility in the Mississippi River corridor area of Louisiana." That project is expected to be in service during 2018; it is anchored by a 130,000 MMBtu/d, 10-year precedent agreement.

"We've invested approximately $400 million in our current slate of growth projects, and our project backlog now stands at approximately $1.2 billion, including the newly announced growth projects," Horton said.

Recently, BWP brought online its Louisiana Access Project, which began service June 1, making Texas Gas a "truly bidirectional" pipeline (see Daily GPIMay 31). The Southern Indiana Lateral Project, which serves an industrial customer, entered service in late June (see Daily GPIJune 17).

In the coming weeks, the Western Kentucky Lateral, will be entering service to supply gas to a new power plant (see Daily GPIMarch 19, 2015), and a project to serve a power plant in South Texas also is expected to enter service during the third quarter, Horton said.

Previously announced projects now in development include the Northern Supply Access Project, on which construction began last month (see Daily GPIMarch 29).

"We have made the decision to defer the capital related to the 100,000 MMBtu/d that is currently unsold [on Northern Supply Access] and at this time only construct for the current contracted volumes of 284,000 MMBtu/d," Horton said. "As a result, we will reduce our capital investment for this project from $310 million to $230 million. This decision will generate similar project returns while we take steps to preserve the option to construct for the remaining 100,000 MMBtu/d as the market interest in the project increases. We still anticipate that the 280,000 MMBtu/d of capacity will be in service in the first half of 2017."

Construction is progressing on Boardwalk Louisiana Midstream to provide ethane and ethylene transportation and storage services for Sasol's new ethane cracker and derivatives complex in Westlake, LA (see Daily GPIApril 30, 2014). This project is expected to enter service late next year, Horton said.

In June BWP was awarded a FERC certificate for the planned Coastal Bend Header Project, which is the largest of the company's current growth projects (see Daily GPIJan. 29). "All of the firm transportation agreements associated with this project have been executed, and preliminary construction activities are under way. This project is expected to commence service in 2018," Horton said.

BWP reported operating revenue of $306.3 million for the second quarter, a 3% increase from $298.6 million a year ago. Operating revenues, less fuel and transportation expense, were $294.7 million, an 8% increase from $273.8 million a year ago.

Net income of $65.7 million was a 63% increase from $40.4 million a year ago. Earnings before interest, taxes, depreciation and amortization of $190.3 million was a 14% increase from $167.3 million a year ago. And distributable cash flow of $128.9 million for the quarter was a 40% increase from $92.3 million a year ago.

Compared with the second quarter of 2015, the partnership's operating revenues were helped by $12.7 million of proceeds from an undisclosed legal settlement; the return to service in mid-2015 of the Evangeline pipeline system; recently completed growth projects and an increase in the partnership's parking and lending and storage services from "improved market conditions," the company said.

Stay up to date on 2Q16 earnings and projections for the remainder of the year with NGI's Earnings Call and Coverage sheet.

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