This month’s construction report features several capacity-increase projects for existing infrastructure. These projects represent the operators’ efforts to maximize efficient take-away. Throughout the U.S. infrastructure continues to experience tight capacity due to the operators’ increasing production
To that end, new fractionation and processing facilities are scheduled to be built by Oneok Partners LP, Lone Star NGL LLC, Targa Resources Partners LP and DCP Midstream LLC to help address capacity constraints at Mont Belvieu, Texas, as higher natural gas liquids production spurs future projects to alleviate the bottleneck of liquids take-away.
Also, Atlas Pipeline Partners LP has released an impressive spate of construction announcements. These expansions come in response to the significant growth that has occurred and is continuing to occur on all of Atlas’ systems, which are reportedly operating at or near 100% of capacity.
Atlas plans to increase its growth capital expenditures by about $400 million for the 2011 to 2012 period to accommodate the new projects. These projects include $175 million for the expansion of the Western Oklahoma system, $15 million for the re-start of the cryogenic skid at Midkiff in West Texas and $75 million for expansion of the Velma system.
In the northeast, major plans are brewing to address ethane take-away. Royal Dutch Shell Plc is developing plans to build a world-scale ethylene cracker with integrated derivative units in the Appalachian region. The proposed cracker would process ethane from Marcellus shale gas to produce ethylene, one of the primary building blocks for petrochemicals.
"Building an ethane-fed cracker in Appalachia would unlock significant gas production in the Marcellus region by providing a local outlet for the ethane," says Ben van Beurden, Shell's executive vice president, chemicals. Shell is evaluating derivative choices and favoring polyethylene (PE). Demand for PE in North America is expected to grow, so the economic benefits of a regional cracker make this configuration extremely attractive.
Elsewhere, Plains All American Pipeline LP has big projects in the works for the booming West Texas shale. It recently unveiled plans to construct a new 130-mile crude oil and condensate pipeline, a marine terminal facility and 1.5 million barrels (bbl.) of storage capacity to serve growing Eagle Ford production. The project is expected to cost up to $330 million.
To underpin the project, Plains has secured a long-term throughput agreement with Chesapeake Energy Marketing Inc., a subsidiary of Chesapeake Energy Corp. The project is designed to provide about 300,000 bbl. per day of take-away capacity from the western region of the Eagle Ford play to Corpus Christi, Texas and other Gulf Coast markets.
NEW CONSTRUCTION PROJECTS | ||||
Operator/Developer | Project | Location | Added Capacity | Status/Completion |
Penn Virginia Resource Partners LP | Antelope Hills plant expansion | Lipscomband Hemphill Counties, Texas | 70 MMcf/d | To be completed by second-quarter 2012. |
Regency Energy Partners LP | Tilden Treating Facility | McMullen County, Texas | 20 MMcf/d | To be completed by second-quarter 2011. |
Plains All American Pipeline LP | Eagle Ford Crude Oil Pipeline | Western region of the Eagle Ford shale play to Corpus Christi, Texas | 300,000 bbl/d | To be completed by fourth-quarter 2012. |
Atlas Pipeline Partners LP | Velma Processing System expansion | A cryogenic plant will be added to the Velma system in Stephens County and Marshall County, Oklahoma | 60 MMcf/d | To be completed by second-quarter 2012. |
DCP Midstream LLC | LaSalle Processing Plant | Weld County, Colorado | 110 MMcf/d | To be completed by second-quarter 2013. |
Targa Resources Partners LP / DCP Midstream LLC | Cedar Bayou Fractionator expansion | Mont Belvieu, Texas | 100,000 bbl/d | To be completed by second-quarter 2013. |
Enterprise Products Partners LP | Mid-America Pipeline System | San Juan Basin area to Gaines County, Texas | 85,000 bbl/d | To be completed by second-quarter 2014. |
Enterprise Products Partners LP | Eagle Ford Shale Crude Oil Pipeline | Phase II of the project will originate in Wilson County, Texas, at the terminus of the previously announced Phase I segment, and extend to Gardendale, Texas, in La Salle County | 200,000 bbl/d | To be completed by second-quarter 2013. |
Oneok Partners LP | MB-2 Fractionator | Mont Belvieu, Texas | 125,000 bbl/d | To be completed by second-quarter 2013. |
Eagle Rock Energy Partners LP | Phoenix Processing Plant | Hemphill County, Texas | 70 MMcf/d | To be completed by second-quarter 2011. |
Energy Transfer Partners LP | Gas processing plant | Jackson County, Texas | 800 MMcf/d | To be completed by second-quarter 2013. |
Recommended Reading
CEO: Coterra ‘Deeply Curious’ on M&A Amid E&P Consolidation Wave
2024-02-26 - Coterra Energy has yet to get in on the large-scale M&A wave sweeping across the Lower 48—but CEO Tom Jorden said Coterra is keeping an eye on acquisition opportunities.
Endeavor Integration Brings Capital Efficiency, Durability to Diamondback
2024-02-22 - The combined Diamondback-Endeavor deal is expected to realize $3 billion in synergies and have 12 years of sub-$40/bbl breakeven inventory.
Patterson-UTI Braces for Activity ‘Pause’ After E&P Consolidations
2024-02-19 - Patterson-UTI saw net income rebound from 2022 and CEO Andy Hendricks says the company is well positioned following a wave of E&P consolidations that may slow activity.
CEO: Magnolia Hunting Giddings Bolt-ons that ‘Pack a Punch’ in ‘24
2024-02-16 - Magnolia Oil & Gas plans to boost production volumes in the single digits this year, with the majority of the growth coming from the Giddings Field.
E&P Earnings Season Proves Up Stronger Efficiencies, Profits
2024-04-04 - The 2024 outlook for E&Ps largely surprises to the upside with conservative budgets and steady volumes.