Targa Resources Corp. said this week that it has entered long-term fee-based agreements with an undisclosed producer that will find it spending $500 million to expand natural gas gathering and processing services in the Permian Basin’s Delaware sub-basin.
The company also said that it would extend its Grand Prix natural gas liquids (NGL) pipeline that’s currently under construction into southern Oklahoma. The system, which was announced last year, would connect the Permian and the company’s North Texas gathering system to its fractionation and storage complex at the NGL market hub at Mont Belvieu, TX.
Targa said it would build 220 miles of 12- to 24-inch high pressure rich gas gathering pipelines across parts of the Delaware sub-basin. Under the fee-based agreements, plans also call for a new 250 MMcf/d cryogenic natural gas processing plant that is to be called the Falcon Plant and enter service in the Delaware in 4Q2019. A second 250 MMcf/d processing plant that’s to be called the Peregrine Plant would enter service there in 2Q2020.
The company said it would also provide NGL transportation services on Grand Prix and fractionation services at its Mont Belvieu complex for a majority of the NGLs from the Falcon and Peregrine plants.
“This is a significant extension of our multi-plant, multi-system Delaware footprint, adding infrastructure through the core of the Delaware Basin. Also, the expansion of our Grand Prix NGL Pipeline into Oklahoma is an attractive extension of a highly strategic asset for Targa, enhancing the capabilities we can offer our existing and potential customers in southern Oklahoma,” CEO Joe Bob Perkins said.
Targa said the Grand Prix expansion is underpinned by significant long-term commitments for both transportation and fractionation services from its existing and future processing plants in the Arkoma area in its SouthOK system and from third party commitments, including a significant long-term commitment for transportation and fractionation with Valiant Midstream LLC. Targa now expects to spend $1.65 billion on the system instead of the $1.3 billion it budgeted when the project was first announced.
Once completed, the capacity of Grand Prix from North Texas, where Permian and Oklahoma volumes will be connected to a 30-inch diameter segment of the pipeline to Mont Belvieu, will be 450,000 b/d, expandable to 950,000 b/d. The capacity on the 24-inch segment from the Permian to North Texas would be 300,000 b/d, expandable to 550,000 b/d. From southern Oklahoma to North Texas, capacity would vary based on telescoping pipe size. The company still expects Grand Prix to be in service in 2Q2019.
Targa is one of the largest gatherers and processors of natural gas in the Permian, with 2 Bcf/d of current natural gas processing capacity and another 1.5 Bcf/d being added across both the Midland and Delaware sub-basins. Perkins said the latest investments are “aligned with our strategic objectives of leveraging existing Targa infrastructure to further strengthen our competitive position.”
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