While Hart Energy’s annual Top Gas Processor rankings for 2010 saw few changes from the previous year, our Top NGL Producer rankings for 2010 had several significant changes as producers and midstream operators focused more on liquids due to the large price advantages it offered.
Not only did DCP Midstream maintain its ranking, the company also maintained a large gap between itself and the second-ranked NGL producer as it saw production increase 3% to 368,931 barrels per day (b/d) in 2010 from 358,000 b/d in 2009.
The company saw NGL production increase in liquids-rich plays in which it had super-systems that give it a dominant position, including the Eagle Ford in which it is building such a system. It is also expanding its operations in other liquids-rich portions of the DJ basin and the Woodford and Avalon shales. We will have more on DCP Midstream’s plans in next week’s issue of Midstream Monitor, in which we interview Bill Waldheim, president of the company’s Northern Division.
Moving up to second place in the rankings of the Top NGL Producers was Enterprise Products Partners, which after adjusting its 2009 figures was also moved up in our rankings for that year. The company’s numbers now reflect production from all company-owned facilities.
Enterprise’s NGL production increased 3% to 272,000 b/d in 2010 from 263,000 b/d in 2009. This production is likely to continue to grow in the future as the company recently announced plans to add a sixth fractionator at Mont Belvieu to handle increased volumes from the Eagle Ford. This new facility will increase its NGL production at the hub by 75,000 b/d.
When the fractionator is brought online in 2013 it will increase the company’s total fractionation capacity at Mont Belvieu to 450,000 b/d and its overall system capacity to more than 780,000 b/d.
"The announcement of our third fractionator at Mont Belvieu in less than two years is yet another indication of the robust demand for Enterprise's midstream services to handle increased natural gas production from the expanding shale plays," said A.J. "Jim" Teague, executive vice president and chief operating officer of Enterprise's general partner. "As with our fifth Mont Belvieu fractionator, which is currently under construction and scheduled to be completed in the fourth quarter of 2011, the sixth unit is expected to be fully contracted when it begins service." Teague added. "The additional capacity at Mont Belvieu will give us the capability to handle approximately 75,000 b/d of mixed NGLs currently being diverted to Louisiana for fractionating, as well as an incremental 30,000 b/d of y-grade from the Phase II expansion of our Yoakum processing facility in Lavaca County, Texas."
As noted in our previous annual rankings, both ExxonMobil and BP were not included in the Top NGL Producer rankings because they do not separate their NGL production from their total liquids production. As such, we are unable to rank them in the top NGL producers’ rankings, though we are fairly certain that all three would be included in the list. Additionally, as of our publication date, we do not have the final figures for either Aux Sable or Enbridge, which are likely top 10 NGL producers. Once we obtain these figures we will be sure to update the rankings and publish them.
MarkWest Energy Partners posted the largest gain in NGL production by any of our Top NGL Producers. In 2010, NGL production increased 15% to 55,362 b/d from 48,059 b/d. Much of the company’s growth in the past year has been focused on the Marcellus shale, which includes the 60,000 b/d Houston, Pa., fractionation facility. This is the largest fractionation complex in the Northeast.
The company has been active in the Appalachian basin for years and has been increasing its focus on liquids production recently. “Being able to capture value from liquids is the sweet spot for us,” said Frank Semple, MarkWest chairman, president and chief executive, at Hart Energy’s Marcellus Midstream conference in March.
Southern Union had the second-largest increase in NGL production in 2010, as its volumes increased 11% to 46,471 b/d from 42,065 b/d in 2009. Should Williams’ proposed acquisition of the company prove to be successful, it is possible that the combined companies would be the second-largest NGL producer as their combined production figures would have surpassed Enterprise’s figures in 2010.
Williams’ production improved 6% to 174,000 b/d, which pushed the company to the number three position in our rankings ahead of Chevron, which saw production remain flat at 161,000 b/d.
Coming in behind Williams and Chevron was Targa Resources Partners at 121,200 b/d, up 3% from 2009 when its production was 118,300 b/d as the company increased its focus on liquids.
“We continue to benefit from very strong industry fundamentals across all of our businesses and are solidly focused on execution to capture the growth opportunities. Technology-driven E&P activity is driving growth in liquids-rich natural gas production for our gathering and processing operations. The growing NGL supply profile in turn drives our fee-based downstream business, and investment opportunities are abundant in both areas,” Rene Joyce, the company’s chief executive, said during its Q1 2011 conference call.
In an effort to avoid double-counting production in our rankings, Midstream Monitor defines NGL production and processed gas as the total first-party output by the owners of the production facilities. Hart Energy and other industry experts believe this is the most reliable way to avoid double counting production held by minority owners of plants and liquids output retained by producers under fee contracts.
To compile both rankings, Midstream Monitor gathered North American gas processing and NGL production volumes from public data as well as from the companies themselves. If the figures were not already in cubic feet per day and barrels per day, Hart Energy converted them into these formats. In addition, we organized a vetting group composed of industry experts and analysts to review our data. No member of the group is employed by any of the ranked companies.
Hart Energy has made every reasonable effort to ensure the veracity of this information. Neither Hart Energy Publishing, Midstream Monitor, Midstream Business nor any other party involved in the presentation of this material will be held liable for any errors or omissions.
Contact the author, Frank Nieto, at fnieto@hartenergy.com.