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Last year, Tom O'Connor and his DCP Midstream LLC team noticed the significant resurgence of crude oil and liquid production in the Permian Basin. The trend was consistent with what the company was seeing in other liquids-rich regions of its footprint.

At its helm is Tom O'Connor, chairman of the board, president and chief executive. Additionally, he is chairman of the board of DCP Midstream Partners LP.

He is a member of the Science Development Board at The College of Arts & Sciences at the University of Massachusetts at Lowell, and was named Distinguished Alumnus of 2004 by the biology department and 2008 Alumni of the Year. O'Connor is also a member of the board of directors for Tesoro Logistics LP. In 2011, served as chairman of the Denver Start! Heart and Stroke Walk, the American Heart Association's largest fundraising event. He and his wife, Diane, have two daughters and a son and reside in Evergreen, Colorado.

MIDSTREAM When did you first become interested in working in the energy industry?
O'CONNOR I actually came into the business in the environmental side. That was my background in college and upon graduation, but I quickly moved over to the business side of long-haul pipelines. I came to DCP Midstream at the end of 2007. This was a business that I had watched being built while working with Duke Energy. I knew the people that had been involved with this for several years, so it was an honor and a very exciting opportunity for me to come here and run the business.

MIDSTREAM DCP already has extensive holdings, but do you see further opportunities?
O'CONNOR We are in a time of tremendous growth in the midstream industry, so there is opportunity for investment in this space for new infrastructure. Really, it is driven by the technological advances which are being brought to bear through the drillbit and in exploiting new resources. That is resulting in unprecedented growth in domestic natural gas and NGLs and growth in domestic crude oil production. All of that is stimulating the need for new infrastructure in the midstream space.

MIDSTREAM In what way?
O'CONNOR For DCP, this phenomenon is stimulating a lot of new growth in several of our key areas. In 2010, we saw an emerging paradigm of very strong liquids prices and low natural gas prices. That suggested to us that producers would focus very heavily on liquids-rich and crude oil plays, and move away from the dry-gas plays. So we decided to de-emphasize dry gas in our portfolio and focus on those areas where liquids could be extracted with natural gas, believing that would be the key focus of our customers. That will drive growth and investment on the production side. It's turned out to be a very good decision for us and at this time, we have over $4 billion of projects in-flight, with another $2 billion in development.

MIDSTREAM What are DCP's key areas?
O'CONNOR We ramped up our efforts in the Eagle Ford, the Denver-Julesburg Basin and the Permian and have expanded into the Granite Wash. That's the foundation off which we are operating. With that as a background, we did several things. In the D-J Basin, we completed the Mewbourn facility in the middle of last year. We have announced a new processing facility, the 110 MMcf per day LaSalle plant, which is under construction to be completed in mid-2013. And we are looking at an additional processing facility that would be online in the middle of 2014.

MIDSTREAM And in the Eagle Ford?
O'CONNOR In the Eagle Ford, we already had significant processing capacity, about 800 MMcf per day. Some of that capacity was available for the new Eagle Ford volumes. Now, we have installed over 200 miles of new gathering facilities and announced our new Eagle plant. That is under construction and will be online later in 2012. We are looking at additional processing facilities, beyond that, because we have more than 500,000 acres committed to DCP Midstream and we are expecting more to come. The Eagle Ford is a phenomenal development, regarding how quickly it moved from early beginnings in 2009 to where it is today. Again, the producers are focused on liquids and crude, which creates great opportunities for gatherers and processors.

MIDSTREAM What about the Permian?
O'CONNOR The Permian is such an exciting area. We are seeing a significant ramp up of producer activity, stimulating the need for new infrastructure. DCP is the largest gatherer and processor in the Permian, with more than 1.3 billion cubic feet (Bcf) per day of processing and 18,000 miles of gathering lines. We produce almost 140,000 barrels per day of liquids from the Permian, and we see it as a prime growth area, not only for us but also for several of our customers. It's a large area, but much of the resource is known and understood. It's primarily crude oil with associated gas, so it requires processing. Even in a low gas-price environment, the area sees a lot of drilling because the crude prices have been so strong recently. The new horizontal and fracking technologies are expanding the resource both vertically and horizontally. By that, I mean the producers are now able to exploit resources that, in past years, maybe had been uneconomic. With that level of effort and the growth in the area, comes the need for expanded infrastructure. In the past couple of years, DCP had been restarting plants, debottlenecking plants, and bringing on capacity up to 200 MMcf per day.

MIDSTREAM Is that sufficient capacity for such a mature play?
O'CONNOR No. As soon as we expand capacity, it fills up. So, recently, we announced that our 75 MMcf per day Rawhide plant in Glasscock County, Texas, will be brought online in mid-2013. It will include associated low-pressure gathering to handle Wolfberry production in Permian Basin.

MIDSTREAM Is that your only planned facility near there?
O'CONNOR No. We have three other plants in various stages of development that we'd like to bring to fruition during the next 12 to 18 months. Also, with all of this drilling and processing comes a lot of liquids, and every pipeline from the Permian to Mont Belvieu is completely full, so last year we announced our plans to build the Sand Hills pipeline. That 700-mile line, at a cost of about $1 billion, will bring significant new NGL transportation capacity to the Permian. We will then have a way to get those barrels from the Permian to the premium market at Mont Belvieu. Sand Hills is under construction and making great progress.

MIDSTREAM What is new with your Midcontinent operations?
O'CONNOR Our growth opportunities there have been modest during the past few years. But, during 2011, we announced the development of the Southern Hills NGL pipeline. That will traverse from the Midcontinent down to Mont Belvieu. The development of that pipeline project, which is scheduled to be completed in mid-2013, has really changed our conversations with our customers.

MIDSTREAM In what way?
O'CONNOR It significantly improved our competitive posture and allowed us to move into some of the exciting new growth areas, such as the Granite Wash and the Mississippi Lime. We have more than $750 million in gathering and processing expansions under way in the Midcontinent. Those compliment the development of Southern Hills, which will cost about $1 billion.

MIDSTREAM Do these projects signal a new strategy for DCP?
O'CONNOR As a company, we are moving down the value chain with the development of these two major NGL pipelines, but we are also putting ourselves in a place where we can offer integrated solutions to our customers, including gathering, processing, NGL transportation and fractionation services. We are building a one-stop-services company, which is really transformational for us. It takes this company to a different place in the energy industry. Beyond these, we see another round of projects coming down the road as we continue to see producers move more drilling rigs into our core areas.

MIDSTREAM Would those be acquisitions or greenfield construction?
O'CONNOR Whether those would be done by greenfield or by acquisition with follow-on buildout is really hard to say. We are open to either option, but as you know, assets offered for sale today tend to be very pricey. Our first focus would be to actually build out an area.

MIDSTREAM Will you look toward the northeast for new opportunities?
O'CONNOR We continue to be interested in other basins, such as the Marcellus and Utica shale plays and the Bakken. These are areas where we think we will see significant activity, particularly in the liquids-rich portions. So we keep looking, but we haven't found the right opportunity yet to follow through on any projects. At some point, I expect we will be in those plays. For now, we have so much activity going on in our core areas that job one is to make sure we follow through getting the infrastructure built, on time, on budget and safely, on which our customers are depending.

MIDSTREAM What are the major challenges to doing that?
O'CONNOR The number one problem is the lack of regulatory certainty. During a time of heavy construction and major infrastructure buildout, the permitting process needs to be known, understood, predictable and timely. We have a lot of clarity in many of the more mature areas, but as you can see in some of the newer areas, the pathway isn't quite as clear. We are watching some of the struggles that are going on, particularly in the northeast where they are not used to seeing significant midstream facilities.

MIDSTREAM And a second?
O'CONNOR Another challenge, for the industry, is the debate around hydraulic fracking. It's often in the news, but content is lacking. Really, the question is how to develop what has been given to us as a tremendous resource with new technology for production. This supply dynamic is a place this country has not been in for a very long time. It generates jobs, economic fuel for electricity, and it has created a resurgence in the chemical industry, which, until a few years ago, was on its knees.

MIDSTREAM And a third challenge?
O'CONNOR That would be people resources. The industry is hiring. We are bringing in workers from a variety of industries that are not as robust as is the energy business. But we also have an aging workforce. The issue that we wrestle with is getting the infrastructure built despite the amount of activity in the entire industry. How do we bring in enough people across the spectrum, whether that is in engineering, environmental or commercial, to allow us to execute well on the opportunity that is in front of us? One way we and others are meeting that challenges is through granting career and technical scholarships, to support a number of schools and trades, to help the industry as it goes forward.

MIDSTREAM Is there any overall strategy that works to meet these challenges?
O'CONNOR The bottom line is stakeholder education, following through on what we say we are going to do, and how we said we were going to do it, and being a responsible part of the community where our assets are located. We want to be welcome in the communities, and for the most part, I think you will find that we are. That builds up goodwill and reputation so when challenges arise we can work with the people in the communities to get those resolved.

MIDSTREAM Clearly you enjoy your work.
O'CONNOR We all benefit from the fact that this is a wonderful industry to be in right now. It's such an exciting time, for all our employees, to be growing, to be building, to be bringing new people into the company at a time when the economy is not that way everywhere else.