Phillips 66 Plans Gulf Coast Fractionator

Mont Belvieu Factionator

Phillips 66 is planning to build a 100,000 b/d fractionator in Old Ocean, TX. The plant will alleviate congestion in Mont Belvieu and add an outlet for Y-grade NGLs from the Eagle Ford. The plant will be located near the company's Sweeney Refinery and will have access to Gulf Coast petrochemical customers and the Month Belvieu distribution network.

Fractionators are used to separate NGL production into its various components (ethane, butane, propane, etc.).

“This project would enable us to take advantage of strong existing midstream transportation and storage infrastructure along with demonstrated operations excellence,” said Phillips 66 Chairman and CEO Greg Garland. “We see excellent market-facing opportunities to grow the natural gas liquids business, and the chance to supply purity NGLs and liquefied petroleum gas to the petrochemical industry and heating markets.”

Phillips 66 is currently seeking interest from suppliers of Y-grade NGLs.

The plant will also create even more Texas oilfield jobs. Hundreds of construction workers will be needed and 25 full-time positions will be created to run the plant. Construction should begin in early 2014 and the plant should be in service in late 2015.

Phillips already owns fractionation capacity in the Gulf Coast, at Mont Belvieu, and in Conway, Kansas.

Read more at Phillips66.com

Natural Gasoline From The Eagle Ford Headed North?

Mont Belvieu Factionator

In response to growing production of light crudes and NGLs, Enterprise Product Partners (EPD) is proposing a diluent-quality natural gasoline pipeline from Mont Belvieu to delivery points in and around Chicago.

The pipeline is only proposed at this time and an open season where companies can commit to capacity will last until April 18, 2013. If enough commitments are made, the pipeline will go forward. Even if it doesn't, a market for natural gasoline is needed as production from plays like the Eagle Ford booms.

The pipeline could connect with both the Southern Lights and Cochin pipelines in the Midwest.

Read more about the open season at enterpriseproducts.com

There isn't a standard definition for natural gasoline, but consider it something between natural gas condensate and oil. Natural gasoline has a typical API gravity of 80 degrees or almost double WTI crude oil at 42 degrees. The name is a little deceiving in that you can't pump natural gasoline straight into your car. The octane content isn't high enough for modern vehicles. It can be mixed with ethanol and used as a motor fuel or it can be used as a diluent in refining processes.

P.S. Watch for pictures from beautiful Joshua Creek Ranch in our rig count article tomorrow.

DCP's Sand Hills Pipeline Moving Eagle Ford NGLs to Mont Belvieu

DCP Sand Hills Pipeline Map - Eagle Ford Segment

DCP's Sand Hills Pipeline has started servicing the Eagle Ford Shale. The company is opening the 720 mile pipeline that runs from the Permian Basin to Mont Belvieu (East of Houston) in segments. The next segment connects directly to Mont Belvieu and will be open by the end of 2012. Construction tying in the Permian Basin will be finished mid-2013.

“When finished, Sand Hills Pipeline will be a major link between the liquids-rich Eagle Ford and Permian producing regions and growing Gulf Coast markets,” said Tom O'Connor, chairman and chief executive officer of DCP Midstream. “With Sand Hills, we can offer an integrated NGL takeaway solution to producers, who will enjoy reliable one-stop service. Sand Hills adds to our well positioned assets in the Permian and Eagle Ford producing regions.”

When finished, the Sand Hills Pipeline will be 720 miles of 20-inch pipe with capacity of 200,000 barrels per day of NGLs and will have the ability to expand to 350,000 b/dif needed. DCP is projecting it will spend $1 billion on the pipeline and offers three strategic reasons for constructing the pipeline:

• Provides critical capacity and NGL transport from South Texas and the Permian Basin
• Capitalizes on increased Eagle Ford growth
• Improves reliability of the overall NGL network

Eagle Ford's Location is Long-Term Strategic Advantage

After spending much of the week at Bentek's Benposium, it is clear the Eagle Ford's position in the Gulf Coast energy complex is a long-term advantage.

"The Eagle Ford is exciting because of its location to the Gulf Coast. With rich gas in close proximity to Mont Belvieu, the Eagle Ford's NGL net backs are among the highest in the country" - Kristen Holmquiest, NGL Analytics at Bentek

Energy Isn't New to Texas

The state of Texas leads oil & gas development in the U.S. Almost 44% of active onshore rigs are running in the state. The state has been an energy leader for decades......

For the Eagle Ford, that means the oil companies are close, infrastructure is close, and the chemical complex is very well developed. Midstream operators have announced $5 billion plus in expansions in the past six months. They will collectively add more than 3.2 Bcf/d in processing capacity in the region.

Even that is dwarfed by what oil & gas operators are spending, and both are setting the stage for what's to come. We're only one year into true development and the play is just starting to roll. The half a million barrels a day of liquids the play will produce by the end of the year is clearly on a path to double or triple in the subsequent five.

The play's location also means operators realize better prices. Oil produced in the Bakken Shale, due to constraints and transportation costs, can be priced at a discount from $10 to $20 per barrel less than WTI. Compare that to the Eagle Ford where we're currently seeing positive differentials to WTI, and you see why being close to the refineries is important. $10/bbl makes a big difference on the bottom line.

Risks to Eagle Ford Development

As with all oil & gas plays, the Eagle Ford isn't without risk. Its location offsets the major risks to some degree, but we've seen prices and economies change in the past. $100/bbl oil has driven development to current levels, but if prices dropped below $80/bbl, you'd begin to see a slow down.

As production grows, there could be growing pains. There is only so much capacity for the light crude in the Gulf Coast. If refiners don't act quickly, we could have periods where there simply isn't enough demand for Eagle Ford condensate.

Enterprise Products Adding NGL Fractionators 7 & 8 at Mont Belvieu

Enterprise Product Partners is the latest of many Eagle Ford midstream companies that are adding infrastructure to handle growing NGL production. Enterprise is already constructing its sixth fractionator at Mont Belvieu and the latest announcement comes after Dow and Shell announced plans to go forward with new petrochemical plants in the U.S. The additions will add 150,000 b/d of incremental capacity in the fourth quarter of 2013 when total capacity will be more than 610,000 b/d at the facilities. That's more than double the capacity of Enterprise's plant just two years ago. The plans are supported by growing volumes of NGL production in the Eagle Ford Shale, Rocky Mountains, and West Texas.

Expanding Enterprise's Eagle Ford Midstream Business

The company is also extending its Eagle Ford NGL pipeline (450,000 b/d ultimate capacity) to Anadarko's Western Gas Brasada Processing Plant (200 mmcfd) in La Salle County, TX. The expansion adds over 173-miles of pipe, with capacity of 140,000 b/d, that will connect to Enterprises infrastructure near the company's processing plant in Yoakum, TX. The extension gives access to the Western Gas Plant and seven other South Texas processing facilities.

As of the announcement, Enterprise had completed 375 miles of natural gas pipelines in the South Texas Eagle Ford. The company's Eagle Ford Mainline system is close to completion and will be able to deliver 900 mmcfd of rich gas to the Yoakum plant. The Yoakum plant will begin processing rich gas in May and will reach full capability by the first quarter of 2013. At that time, the plant will be able to process 900 mmcfd of gas, with capacity of 110,000 b/d of NGLs.

Including Enterprise’s seven other integrated South Texas processing facilities, the partnership will be able to offer approximately 2.4 billion cubic feet per day of processing capacity for the region when Yoakum is fully operational.

What is a NGL Fractionation?

Once NGLs are processed out of the natural gas stream, wet-gas, the individual products must be separated to be marketed and consumed. Fractionators take the NGLs to their various boiling points and separate out the individual products - ethane, butane, iso-butane, propane, pentanes, and natural gasolines. Ethane is a common feedstock for petrochemical plants and butane and propane can be used for heating or in your lighters and grills.