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Clearfork Boosting G&P on Holly Haynesville System on Strong Customer Demand
Growing demand from natural gas producers in the Haynesville Shale is driving a suite of gathering and processing (G&P) expansions on Clearfork Midstream LLC’s Holly System in North Louisiana.
The expansions include constructing a 24-inch diameter pipeline to the east side of the Red River in northeast Red River Parish, as well as a 16-inch diameter pipeline in the Spring Ridge area in Caddo Parish. EnCap Flatrock Midstream-backed Clearfork also would build interconnects for additional takeaway capacity and downstream market optionality for customers as part of the expansions on the assets formerly owned by Azure Midstream Energy LLC.
“These expansions strengthen our position in the Haynesville, where we remain focused on deploying growth capital and developing the infrastructure needed to serve our customers’ needs,” said CEO Kipper Overstreet.
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The company chief told NGI that commercial discussions with producers have been active over the past seven months, with Clearkfork “90% confident in 2023 volumes and 50% in 2024 volumes.
Liquefied natural gas is “capacity coming online to drive activity or support activity that’s already started,” he said.
Given the price volatility in the natural gas market, Overstreet said he doesn’t put capital behind projects without having solid insight into how much production is expected to come online. That said, Clearfork has an opportunity to get an additional treater “ready to go once customer demand shows up,” which may occur in the first half of next year. “We’ve got dry powder there as well.”
In conjunction with the gathering expansion, Clearfork is increasing its overall treating and compression capacity across the Holly System. Treating capacity at Clearfork’s Holly 3 facility is to increase with the installation of contactor towers, optimization projects and additional compression across the system. This would provide lower-pressure service while also meeting the pressure requirements of downstream pipelines, according to the company.
Treating capacity at the Holly 6 facility would increase by installing a recently acquired amine plant and related assets.
Looking beyond these projects, Clearfork also owns idle amine treating assets that could, when paired with additional commercial activity, increase treating capacity across the Holly System to around 1.8 Bcf/d in 2023.
Overstreet acknowledged that given the lack of excess capacity on Haynesville pipelines, Clearfork has to be disciplined in managing operations and downtime at its facilities. The CEO is optimistic that additional egress is coming, though, with several projects reaching a positive final investment decision in the last six months.
“Some of that will alleviate those constraints, and it is our intent to connect to projects that our customers want to have access to,” he said. “We’re doing that as part of these current expansions and we’ll continue to do that in the future.
“For us, it comes down to fundamentals. Our thesis when we acquired this business was to be successful with even $2-3 gas. Fortunately, we came in when prices were getting some tailwinds that allowed us to underwrite these expansions,” Overstreet said.
“Fundamentally, the world is short natural gas. That is our biggest driver. We are still very bullish.”
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