Southern Union Co.'s Trunkline Gas Co. has signed a precedent agreement with DCP Midstream LLC to provide long-term, firm transportation service for liquids-rich gas. DCP Midstream will be the anchor shipper on a modified portion of the Trunkline system in South Texas focusing on Eagle Ford Shale production.
Trunkline intends to file with FERC to make changes to the southernmost segment of its pipeline in Texas to provide DCP Midstream with transportation service from the Eagle Ford play. Trunkline would isolate its South Texas system at the Edna compressor station in Jackson County, TX, and modify its facilities to allow bidirectional flow and the transportation of liquids-rich gas. In addition, Trunkline will seek Federal Energy Regulatory Commission approval to make certain gas quality changes in its tariff.
The agreement "will provide for Eagle Ford Shale production to be brought to market by using Trunkline's South Texas System to its full capacity," said Mike Moran, chief commercial officer for Southern Union's pipeline group.
DCP Midstream owns and controls more than 800 MMcf/d of gas processing capacity and associated fractionation within South Texas among five plants. Three DCP Midstream plants currently access Trunkline, and DCP Midstream will build approximately 29 miles of gathering pipeline to connect the remaining plants to leverage 165 miles of the Trunkline system, DCP Midstream said.
Trunkline will then act as a backbone for creating a DCP Midstream processing "super system" within South Texas, according to DCP Midstream, which said it will further upgrade its processing plants to maximize throughput of the richer Eagle Ford gas and will seek to add additional plant capacity over time. DCP Midstream currently has more than 250 MMcf/d of available processing and associated fractionation capacity available in the area that Trunkline will serve to integrate, it said.
"We are very excited to work with Trunkline to provide an immediate solution that builds on DCP Midstream's existing footprint in the Eagle Ford basin," said DCP Midstream CEO Tom O'Connor. "This transaction supports DCP Midstream's strategy of leveraging existing processing infrastructure around the Eagle Ford area to provide producers with faster access to residue gas and natural gas liquids markets, and has room to be scalable for future growth. This Eagle Ford initiative complements DCP Midstream's in-flight expansions in the liquids-rich Denver-Julesburg/Niobrara, Wolfberry, Granite Wash and Avalon shale plays."
DCP Midstream currently has more than 125,000 acres of Eagle Ford production dedicated to its facilities.
In June DCP Midstream said it had acquired the Liberty gathering system and south Raywood processing plant from Ceritas Energy in Liberty County, TX, noting that it would interconnect the gathering system with its Centana Intrastate Pipeline system in southeast Texas.
The deal included about 36 miles of gathering pipeline, a cryogenic 50 MMcf/d processing plant and a 4.5-mile natural gas liquids (NGL) pipeline that interconnects with Black Lake NGL pipeline partially owned by DCP Midstream's master limited partnership, DCP Midstream Partners LP.
"This acquisition is an important step out from our adjacent footprint, allowing DCP Midstream to provide additional capacity to our customers in this high-growth and liquids-rich area," O'Connor said at the time. "Together with expansion projects under way in the Permian, Eagle Ford and [Denver-Julesburg] basins, DCP is executing on many growth projects around its strategically positioned asset base."