Spectra Energy Corp. is taking a one-third interest in the Sand Hills and Southern Hills pipelines, both of which are under construction by DCP Midstream LLC, a joint venture of Spectra and Phillips 66. The deal is expected to close by the end of November when Spectra, Phillips 66 and DCP Midstream each would own one-third of the pipelines and equally fund their completion. The aggregate investment by Spectra is expected to be $700-800 million. Sand Hills, which would take natural gas liquids from the Permian Basin and Eagle Ford Shale to Gulf Coast markets, would have an initial capacity of 200,000 b/d and be expandable to 350,000 b/d. The first phase recently came online and connection to Mont Belvieu, TX, is expected by year-end (see Shale Daily, Oct. 29). The timing of Sand Hills’ second phase, the Permian portion of the pipeline, has advanced and is due to be in service in 2Q2013. Southern Hills would provide 150,000 b/d, expandable to 175,000 b/d, of capacity from the Midcontinent to Mont Belvieu and has a targeted in-service date of mid-2013.
Assets in the Woodford Shale’s Lake Murray area of the Ardmore Basin have been put on the market by Chesapeake Energy Corp. The Oklahoma City-based independent, which is under the gun to pare debt, plans to sell up to $15 billion in assets this year and another $5 billion in 2013. The properties to be sold are on about 37,200 net acres in portions of Oklahoma’s Bryan, Carter, Love and Marshall counties, with 4,200 net acres held by production. Chesapeake noted that it owns 320 or more net acres in 54 sections, “allowing for operational control.” Included are 42 wells in the Woodford Shale, with 10 operated vertical wells, 30 nonoperated vertical wells and two nonoperated horizontal wells. The wells’ cumulative production has been “in excess” of 29 Bcf and 1.6 million bbl of oil, primarily from vertical wells. Net sales over the past year have averaged 1.44 MMcf/d gas at the wellhead and 6 b/d of oil. Operating cash flow has been $109,023 net a month. Proprietary 3-D seismic imaging is available for portions of the sales area.
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