Targa Resources Partners LP has made an anchor commitment to DCP Midstream LLC's Sandhills Pipeline, DCP said Monday. The long-term agreements provide for an interconnection of Sandhills to a new delivery point with Targa's Cedar Bayou Fractionators LP facility at Mont Belvieu, TX.
DCP said it is in negotiations with several customers to sign long-term commitments to Sandhills, which is planned to provide fee-based natural gas liquids (NGL) transportation and fractionation to increased production coming from West and South Texas. Additionally, DCP and Targa announced their agreement for a long-term anchor commitment by DCP for a new 100,000 b/d fractionation expansion at the Targa-operated and majority-owned Cedar Bayou facility at Mont Belvieu.
Sandhills along with Cedar Bayou's new fractionation expansion would allow DCP to provide midstream services for increased liquids-rich gas production from the Avalon Shale/Bone Spring areas in West Texas, as well as the Eagle Ford Shale in South Texas, DCP said.
Separately this week, Nuevo Midstream LLC said it was taking a gas processing plant near Orla, TX, out of mothballs to handle growing production from the Avalon Shale/Bone Spring (see Shale Daily,May 10).
DCP initiated an open season for Sandhills in November (see Shale Daily, Nov. 24, 2010) and is in the process of securing right-of-way and environmental permits for the pipeline. The 700-mile system would transport Y-grade NGLs from gas plants in the Permian Basin and South Texas to the various fractionator facilities along the Gulf Coast along with the Mont Belvieu NGL hub.
The Sandhills Pipeline would serve the NGL transportation needs of Targa's gas plants, existing DCP gas plants and the new 200 MMcf/d DCP Eagle gas plant designed to serve Eagle Ford Shale gas development. In addition, DCP is securing long-term commitments from other third-party shippers.
DCP and Cedar Bayou are coordinating the projects for completion in the first half of 2013.