As liquids-rich production continues to grow in the Lone Star State, midstream developers sensitive to producer needs last week announced plans for a pipeline expansion, two new processing facilities and a fractionator.
Energy Transfer Partners LP said last Thursday new long-term fee based gathering, processing and liquids services agreements with Eagle Ford Shale producers support plans for it to further expand its previously announced Rich Eagle Ford Mainline (REM) pipeline and construct another cryogenic processing facility. Separately, Energy Transfer and Regency Energy Partners LP said their Lone Star NGL LLC joint venture would construct another fractionation facility at Mont Belvieu, TX.
When completed, REM will consist of 257 miles of 30- and 42-inch diameter pipeline with capacity exceeding 1 Bcf/d. The initial phase, consisting of 160 miles of 30-inch diameter pipeline, was placed in service last October (see NGI, April 25, 2011). The first expansion, 60 miles of 42-inch diameter pipeline, is scheduled for completion in the fourth quarter, and the second expansion, 37 miles of 30-inch diameter pipeline , is scheduled to be completed by the fourth quarter of 2013, Energy Transfer said.
The new processing plant, to be in Karnes County, TX, will provide 200 MMcf/d of capacity and is necessary to fulfill the new long-term shipper commitments on REM. This plant, which is scheduled to be completed in the fourth quarter, and the previously announced Chisholm and Jackson County processing plants, will provide 1.125 Bcf/d of processing capacity, Energy Transfer said. The cost for the Karnes County plant and the REM expansion is estimated to be $210 million.
“This latest REM pipeline expansion and new processing plant exemplify the continued robust demand by our customers for additional infrastructure in the Eagle Ford Shale,” said Energy Transfer’s Brian Beebe, senior vice president. “Since October 2010, when we announced the construction of our Dos Hermanas rich gathering pipeline, we have seen ever-increasing demand by customers for takeaway solutions for their production. In addition to the Dos Hermanas pipeline, Energy Transfer has shown its commitment to meeting producers’ needs in the Eagle Ford region by building the Chisholm and REM pipelines, and related plants/facilities, all supported by long-term fee-based contracts with total volume commitments now totaling more than 1.1 Bcf/d.”
Separately, Lone Star is to construct a second 100,000 b/d natural gas liquids (NGL) fractionation facility at Mont Belvieu, TX. Supported by multiple long-term contracts, the second fractionator is necessary to handle the increasing NGL barrels delivered via the partnerships’ Woodford Shale, Eagle Ford Shale and Permian Basin infrastructure, including Lone Star’s 570-mile West Texas Gateway NGL Pipeline, the partners said.
Lone Star is on schedule to complete its West Texas Gateway NGL Pipeline and initial 100,000 b/d fractionator at Mont Belvieu in the first quarter of 2013 and expects the second fractionator to be completed in the first quarter of 2014 (see NGI, June 27, 2011). At an estimated cost of $350 million, the project will also include interconnectivity infrastructure to provide NGL suppliers and NGL markets with access to storage, other fractionators, pipelines and multiple markets along the Texas and Louisiana Gulf Coast, Lone Star said.
“With the capacity of our first fractionator fully contracted, and increasing customer demand for NGL outlets, the addition of a second fractionator was necessary,” said Lone Star’s Greg Bowles, senior vice president. “Our two new fractionators and our West Texas Gateway system are all supported by long-term agreements.”
The Eagle Ford Shale could arguably be called the hottest unconventional play in the country. According to NGI‘s Shale Daily Unconventional Rig Count, Eagle Ford rig activity shows the largest year-over-year growth. For the week ending Feb. 10, 230 rigs were actively drilling in the play, which marks a 61% increase over the 143 rigs operating one year ago.
And in West Texas, DCP Midstream LLC plans to build a 75 MMcf/d gas processing plant in Glasscock County and an associated low-pressure gathering system to service producers focused on the Wolfberry play in the Permian Basin. DCP Midstream said it would also expand its high-pressure gathering system as part of the project, linking its Goldsmith/Fullerton super system with its Triad super system.
DCP Midstream’s planned Rawhide Plant and the gathering systems are to optimize DCP’s Permian super systems and are expected to be in commercial operation by the middle of 2013. The Rawhide Plant and the gathering systems would augment DCP’s existing footprint in the Permian, where the company owns and operates 17 processing plants with a capacity of 1.25 Bcf/d and production of more than 135,000 b/d of natural gas liquids (NGL).
“Our strategy is to keep pace with the growth from this new phase of oil-driven development in the Permian,” said Wouter van Kempen, president of DCP Midstream’s gathering and processing business.
Oil-driven activity in Texas has led to an increase in gas flaring in the state, according to the Railroad Commission of Texas (RRC). In fiscal 2011 the RRC approved 651 permits to flare gas, more than double the 306 approved during the year-ago period (306), which was nearly double the number approved in fiscal 2009 (158) (see NGI, Jan. 23).
The new DCP Midstream plant is the second phase of DCP’s multiphase expansion program for the liquids-rich Permian that could also include construction of additional processing facilities in the region if producer drilling continues to accelerate, DCP Midstream said. The program began with a commitment to build the Sand Hills Pipeline, an NGL pipeline to provide takeaway service from the Permian to fractionation facilities along the Texas Gulf Coast and to the Mont Belvieu, TX, market hub by summer 2013 (see NGI, Aug. 29, 2011).
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