Midstream Business Magazine - April 2011
Editor's Note
Moving Parts
Typically, at the end of the first quarter of each year, oil and gas producers and their midstream service providers are fairly cognizant of their plans for the rest of the year. Not so this year. Upstream and midstream operators find themselves faced with more questions than answers.
Construction Update
Infrastructure Gains Momentum
P?roduction in the shale plays has ratcheted up and rig counts are continuing to rise as well, providing ample demand for additional midstream infrastructure. The majority of recent midstream projects involve expansions to increase much-needed capacity.
Feature
Barnett Barrels On
?Extensive, mature midstream infrastructure supports the big Barnett shale-gas play.
Diverse DCP
?The company targets expansion and new builds to support mounting NGL production, leveraging existing assets.
Game-Changing Gas Flows
?U.S. shale-gas production is significantly changing every direction of traditional gas transmission flows, according to this group of North American energy experts.
Go With The Flow
M?aster limited partnerships (MLPs) were a hot commodity during 2009 and 2010. But despite the space’s continued positive performance into 2011, MLPs fell below the S&P 500’s gain of 3.2% to end the month of February up 2.7%.
High-Btu Fuel Gas
?A case study of peak firing pressures and emission levels on an Ingersoll Rand engine in a gas-storage facility shows how to manage the change to high-Btu fuel gas from the Marcellus shale.
Investment Voyages
?As capital markets recover and respond to construction-growth demand in unconventional resource plays, nimble midstream investors are finding ways to navigate rocky market waters.
Keystone Conundrum
?TransCanada’s proposed extension of its oil pipeline system from Canada’s oil-sands region to U.S. Gulf Coast refineries is drawing debate.
Midstream Connections
?New Williams chief executive Alan Armstrong sees vast potential for the U.S. midstream industry, driven by upstream growth and hungry downstream markets.
Processing Strategies
While the strategies of gas-processing executives vary, they share a common optimism about the sector’s prospects.
Storage Storm Savvy
Experienced storage providers know to keep an eye on the market to foresee avenues of growth, but what happens when the weather takes a turn for the worse? According to NorTex, absolutely nothing—and that’s a good thing.
Alerian Index
MLPs Make Headlines
D?uring February, the Alerian MLP Infrastructure Index (AMZI) produced a total return of 3.7%, slightly outperforming the S&P 500 Index increase of 3.4%. The 10-year treasury increased from 3.4% at the end of January to a high of 3.7% on February 8 and back to 3.4% by month-end.
Finance Matters
M&A Trends Off To A Robust Start
M?idstream mergers and acquisitions (M&A) activity is off to a robust start in 2011, with 11 announced transactions worth $1.5 billion. This compares to 13 transactions worth $1.2 billion in the same period in 2010 (excluding the $12-billion Williams Partners LP restructuring) and 88 transactions worth $47.4 billion for all of 2010.
Midstream Movers
Meet Jarrett Vick
Shale plays bring significant risks to the midstream sector, including cash-flow lag, unmaterialized volume growth, speculative-grade-rated customers, contractual risks, joint ventures and commodity-price risks for those without fee-based revenue.
News Flow
In The Pipeline
Appalachian Basin production is set to rise dramatically as more Marcellus shale wells are drilled in Pennsylvania, speakers said at Hart Energy’s Marcellus Midstream Conference in Pittsburgh.
NGL Frac Spread
Fuel Switching, Supply Shortages Push Ethane, Propane Margins
T?he frac-spread margins for February and into early March were highlighted by strong ethane-margin rebounds at both Conway and Mont Belvieu. Margins were bolstered by increased demand from olefins crackers favoring ethane over naphtha due to price differences.
Transaction Update
Debt And Equity Action Heats Up
So far this year, the debt markets continue to be open to the midstream space, as many partnerships issue debt and call back bonds that were originally issued with significantly higher rates.