Pipeline integrity is required by regulation, but it also makes good economic sense.In a presentation to the Red River Conference in Dallas last Wednesday, Rick McNealy, a pipeline integrity specialist with Blade Energy noted that replacing pipeline costs $1 million to $1.5 million per mile while repairing pipeline runs about $800,000 per mile. That’s while it is critical to repair rather than replace.
Oneok Partners has completed the purchase of an interstate NGL and refined petroleum products pipeline system from a subsidiary of Kinder Morgan for approximately $300 million.The deal, which was first announced in July, is expected to be accretive to Oneok’s earnings beginning in the fourth quarter. Financing for the transaction will come from the partnership’s recently completed notes offering.
MarkWest Energy Partners will invest approximately $100 million to expand its Javelina Plant in Corpus Christi, Texas.MarkWest will begin construction of a steam methane reformer (SMR) facility at the Javelina plant in the fourth quarter of this year and expects to commence delivery of high purity hydrogen in early 2010.
The “go-shop” process conducted on behalf of MarkWest Hydrocarbon by Merrill Lynch has ended.During the “go-shop” process, Merrill Lynch held a variety of discussions with more than a dozen potential transaction partners and no proposal came up that was better than the original merger agreement between MarkWest Hydrocarbon and MarkWest Energy Partners announced Sept. 5. As a result, no parties are designated as excluded parties under the process.
Wachovia believes that technicals rather than fundamentals are driving the current underperformance of MLPs.While the overall stock market has recovered from the August swoon, MLPs continue to flounder. Since August 1, the S&P 500 is up 5.8% versus an 11% decline for the Wachovia MLP index.
Energy Transfer Partners came out vigorously defending itself Tuesday in its long awaited response to FERC’s Show Cause Order of July 26 which alleged that ETP manipulated natural gas prices at the Houston Ship Channel in the wake of hurricanes Katrina and Rita.In its answer to order, ETP reaffirmed that the company’s business transactions were conducted in a lawful and responsible manner. ETP decisively refutes FERC’s claim and emphasizes that FERC’s positions are fundamentally flawed.
Barry Davis stresses that he and other members of the Crosstex Energy team share a clear vision to focus on growth and be the premier provider of midstream energy services.In fact, when asked what Crosstex’s 2020 vision is: Where he would like to see the company in 2020, he emphasized that the mission will be the same. “The great thing from my standpoint is that we’ve never had to change our vision,” Davis says. “Our vision has always been to be the premier midstream energy services company and as we look toward 2020 that will still be our objective. We will just be bigger and better. Our ideal is to build a company that will last beyond 2020. We really are building a company that will last forever, and 2020 will be a mark in time where hopefully we’re bigger and better but still a pure midstream energy services company.”
In Bob Purgason’s thirty years in the midstream business, times have never been better than they are right now. But along with the good times, comes an aging workforce and the need to attract and train new talent to make sure the good times continue.
GPR Editor John Hart is at the Red River gathering in North Texas this week with many of you. John just gave me his two weeks’ notice before he heads to the National Propane Gas Association in Washington as manager of communications. We wish John well in his new role.
The margin on the frac spread was down 4% at Mont Belvieu last week on a full barrel basis. Natural gas prices on the Houston Ship Channel were down less than 1%, but liquids prices themselves simply couldn’t keep rising as in past weeks. At Conway, the margin was off 1.5%, and the dynamics were similar. Daily spot gas on Natural Gas Pipe Line’s Midcontinent Zone rose 3%, while NGL prices eroded slightly.
Light, sweet crude topped out in its current rally at $83.76/b on Sept. 28, and it’s been downhill somewhat for crude and NGLs since then. All of GPR’s weekly liquids price assessments were unchanged or down as much as 4% at Mont Belvieu and Conway in the last week.