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Crosstex: NGL Project Offers a Mont Belvieu Alternative

In an effort to capitalize on liquids-rich gas production in Texas and the Midcontinent and provide producers with a natural gas liquids (NGL) marketing alternative to Mont Belvieu, TX, Crosstex Energy Inc. unit Crosstex Energy LP said it is planning to expand Louisiana fractionation facilities and construct a new NGL pipeline.

A new NGL pipeline extension would originate from interconnections with major Mont Belvieu supply pipelines, providing connections for NGLs from the Permian Basin, Midcontinent, Barnett Shale, Eagle Ford Shale and Rocky Mountain areas to the partnership's NGL fractionation facilities in South Louisiana. In addition to an ethane market, the partnership's facilities in South Louisiana provide access to markets for the remaining components of the NGL barrel, Crosstex said.

"There is increasing demand for fractionation and NGL handling as producers pursue the development of liquids-rich natural gas shale plays," said Crosstex CEO Barry E. Davis. "We will be able to offer our midstream and producer customers an integrated NGL transportation, fractionation and marketing alternative to Mont Belvieu. We will also improve the reliability and diversity of NGL supply to the Louisiana petrochemical and refinery markets, which have been negatively impacted by declining supply from the Gulf Coast."

The new pipeline would be an extension of the partnership's 440-mile Cajun-Sibon NGL pipeline, which is connected to the partnership's Eunice NGL fractionation facilities in south central Louisiana. The new 130-mile, 12-inch diameter NGL pipeline extension would connect the Eunice fractionation facilities to Mont Belvieu supply pipelines and would have an initial capacity of 70,000 b/d of raw-make NGLs.

Last April Crosstex said it had completed and brought online two expansions of its gas gathering system in the Barnett Shale and had reactivated its Eunice fractionator (see Shale Daily, April 8).

The project also includes an expansion of the partnership's Eunice fractionation facilities from 15,000 b/d to 55,000 b/d of NGLs, which would increase the partnership's interconnected fractionation capacity in Louisiana to 97,000 b/d. The partnership's investment for the project is estimated at $180-220 million.

Crosstex has made a long-term ethane sales agreement with Williams Olefins LLC, a subsidiary of Williams Companies, providing a secure market for the key product in the project. The ethane will flow into Williams' ethane pipeline system in Louisiana. In addition, the partnership has its own supply from its Texas gas plants and commitments for supply from a select group of NGL suppliers.

Last month Enterprise Products Partners LP said it would construct a sixth fractionator at its Mont Belvieu facility to increase capacity there by 75,000 b/d. The project follows recent similar expansions by the partnership and joins multiple other projects for the "Henry Hub" of NGLs (see Daily GPI, June 28).

Construction of the NGL pipeline extension is expected to begin in the second quarter of 2012, and the facilities are expected to be operational in the first quarter of 2013.

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