Dynegy Liquids Marketing and Trade has entered into a long-term agreement with Venice Energy Services Co. LLC (VESCO) to provide natural gas liquids (NGL) production with access to additional markets. VESCO, an affiliate of Enterprise Products Partners LP, processes gas production for producers in the central and eastern Gulf of Mexico. The limited partnership includes Enterprise, ChevronTexaco, Dynegy Inc. and Koch Industries.

VESCO owns a natural gas processing and NGL fractionation complex located in Venice, LA, which includes a natural gas processing plant with a capacity of 1.3 Bcf/d and an NGL fractionator with the capacity to separate up to 30,000 bbl/d of mixed NGLs into NGL products (ethane, propane, normal butane, isobutane and natural gasoline).

“While VESCO has excellent linkage to natural gas markets through connections with the Columbia Gulf, Texas Eastern and Gulf South interstate pipeline systems, with the growth in NGL-rich natural gas production from developments in the deepwater, VESCO’s increasing production of mixed-NGLs exceeds the capacity of its fractionator,” the company said in a statement. “As a result, excess mixed-NGLs produced at the facility are currently transported to another fractionator for separation into NGL products.”

Under the terms of the agreements, any mixed-NGLs which are not fractionated at VESCO will be committed to Enterprise, and will be delivered to Enterprise through pipelines owned by ChevronTexaco Pipeline Co. Enterprise will use its integrated value chain to transport, fractionate, store and deliver the NGL products to major petrochemical and refining customers on the Louisiana and Texas Gulf Coast. The connections between VESCO and existing Enterprise pipeline facilities to carry the NGLs are expected to be completed by Sept. 1, 2003.

“These agreements, along with expected increases in NGL production at VESCO from deepwater developments, should substantially increase the volumes that we handle through our network of pipeline, storage and fractionation facilities,” said O.S. “Dub” Andras, CEO of Enterprise. “We believe this has the potential to secure over 20,000 bbl/d of new supply to our value chain by 2004 with minimal capital investment required by Enterprise.” Enterprise owns approximately 13.1% of VESCO, and is the largest NGL producer for the affiliate.

Enterprise, based in Houston, is the second largest publicly traded, midstream energy partnership, with an enterprise value of approximately $5 billion. Its assets are geographically focused along the Gulf Coast, which accounts for approximately 55% of both domestic natural gas and NGL production and 75% of domestic NGL demand, Enterprise noted.

In June, ChevronTexaco closed the sale of its 12.5% ownership interest in a natural gas liquid fractionator to Enterprise as a condition of approving the merger between Chevron and Texaco, which closed on Oct. 9, 2001 (see NGI, June 10). The fractionator, located in Enterprise ‘s complex in Mont Belvieu, TX, has the capacity to fractionate, or separate, 210,000 bbl/d of mixed natural gas liquids into ethane, propane, normal butane, isobutane and natural gasoline. Enterprise currently owns 62.5% interest in the facility and serves as the operator.

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