Howard Energy Partners (HEP) and NextEra Energy Partners (NEP) on Wednesday said they plan to develop more natural gas transportation projects in the Eagle Ford Shale in South Texas with an eye on export markets, including Mexico.
The joint venture (JV) would market capacity on NEP’s’ Eagle Ford Midstream (EFM) system and HEP’s Eagle Ford Gathering (EFG) system. The partners also plan to evaluate additional pipeline opportunities in an area of mutual interest from West Texas to South Texas, including Webb, Duval, Zapata, Dimmit, La Salle, McMullen, Live Oak and Jim Wells counties.
The synergies between the two partnerships’ assets “provide for a compelling footprint, and we are excited about the potential for this joint venture,” said HEP CEO Mike Howard. “The connection to NextEra Energy Partners’ EFM system provides an efficient option to expand capacity on our EFG system, as well as providing our producers a direct link to Agua Dulce, bringing new supplies to the emerging markets in Mexico and the Texas Gulf Coast.”
HEP’s existing system in Webb County in West Texas consists of about 215 miles of lean gas gathering pipeline with 1 Bcf/d of throughput capacity.
NextEra’s system in the Eagle Ford runs 150 miles, with 30-inch and 16-inch diameter pipeline originating in La Salle County and spanning portions of McMullen, Duval, Jim Wells and Nueces counties, and terminates in South Texas at the Agua Dulce hub in Nueces County.
“This is another good example of organic growth opportunities for NextEra Energy Partners in our Texas pipeline portfolio,” NEP President Armando Pimentel said. “While requiring minimal capital investment, this agreement is expected to increase capacity utilization on NEP’s EFM system and improve gross margins by giving NEP access to additional producer volumes in an active Eagle Ford region.”
The JV is based on future commitments on NEP and HEP assets, which means “existing contracts and revenue streams will not be impacted,” Pimentel said.
Among other ventures, HEP and Mexico’s Grupo Clisa are JV partners in the 600 MMcf/d Nueva Era Pipeline LLC, 190-mile system designed to directly connect the gas hub in Webb County to power plants in the Monterrey, Mexico area.
Nueva is anchored by a 504 MMcf/d contract with Mexico’s state power company, Comision Federal de Electricidad, or CFE. The Impulsora Pipeline LLC system began injecting gas into the HEP-operated Nueva system last June.
Projects to export gas from Texas to Mexico and overseas markets are considered crucial to easing constraints in the Permian.
Besides Nueva, cross-border pipeline infrastructure readied last year included Enbridge Inc.’s Valley Crossing, an underwater border crossing in the Gulf of Mexico that connects Texas gas to Mexico markets. The marine hookup was given the green light earlier this month by the Federal Energy Regulatory Commission to begin service. The pipeline project is 30 miles east of Brownsville, which sits at the southern tip of Texas on the border.
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