Looking to boost its midstream natural gas services in the Texas Panhandle, Houston-based Eagle Rock Energy Partners LP is launching a two-phase, $25 million midstream project that would consolidate volumes and operations in the partnership's West Panhandle System and enhance the partnership's capacity and recovery efficiencies in the fast-growing East Panhandle System.
The total project, which is expected to be completed in the first quarter of 2009, involves diverting West Panhandle volumes from Eagle Rock's Stinnett Plant, located in Moore County, TX, to its Cargray Plant, located in Carson County, TX, and subsequently relocating the Stinnett Plant's high-efficiency cryogenic technology to the East Panhandle Arrington System, located in Hemphill County, TX.
The partnership indicated that replacing its Arrington facility's older lean-oil absorption technology with its Stinnett cryogenic recovery process would yield significant efficiencies in liquids recovery and decreased plant fuel use that will go far in enhancing the plant's ability to compete for new volumes within the very active Granite Wash Play area of the East Panhandle. Eagle Rock said the new Arrington facility would be initially sized to handle 50 MMcf/d, but would be readily expandable to 80 MMcf/d with additional inlet, field and residue compression. Currently, the Arrington facility is able to handle 40 MMcf/d.
"This consolidation of our West Panhandle operations is expected to reduce operating costs and better utilize our excess capacity in the West Panhandle operations, improving the partnership's long-term cash flows while enabling us to redeploy a highly efficient cryogenic facility to the heart of the fast-growing Granite Wash play in the East Panhandle System," said CEO Joseph A. Mills. "The combined project is projected to be accretive to cash flows by $0.01 to $0.03 per unit in 2009 and beyond and positions the partnership to expand capacity to service our customers in the Granite Wash Play of Hemphill County, TX."
Eagle Rock said it does not anticipate downtime or reduced throughput volumes across its East or West Panhandle Systems while in the process of diverting volumes to Cargray or in the process of upgrading the Arrington Plant.
In addition to its Panhandle facilities, the growth-oriented partnership has been aggressively building up its midstream and upstream asset portfolio in South Texas, East Texas, Alabama and Louisiana. Last summer, the company strung together a series of privately negotiated transactions worth about $420 million to strengthen its midstream and upstream businesses in Alabama and Texas (see NGI, July 16, 2007). In April 2007 Eagle Rock acquired Laser Midstream Energy LP for $136.8 million (see NGI, April 9, 2007). The Laser assets include more than 405 miles of gathering systems and related compression and processing facilities in South and East Texas and North Louisiana.
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