Access Midstream - Chesapeake Reach $2.16 B Midstream Deal (Eagle Ford Included)

December 13, 2012 R.T. Dukes

Access Midstream Partners (ACMP) has agreed to acquire additional midstream assets from Chesapeake for $2.16 billion. The deal adds natural gas gathering and processing assets across the country. Assets included expand Access Midstream's position in the Eagle Ford, Utica and Niobrara plays, as well as expanding the company's existing position in both the Haynesville and Marcellus dry gas plays. ACMP also negotiated an extension of its exclusivity period for Chesapeake's Mid-Continent assets.

Concurrently, Williams acquired a 50% general partner interest and a 23% limited partner interest in Access Midstream from Global Infrastructure Partners. Access Midstream's GP interest was owned by Chesapeake until June 2012, when it was purchased by Global Infrastructure partners for $2 billion.

J. Mike Stice, Access Midstream Partners’ CEO, commented,

“The acquisition of these midstream assets is a transformational opportunity for Access. Following this transaction, Access will become the largest gathering and processing MLP as measured by invested capital and throughput volume and will have a substantially diversified portfolio with a critical midstream position in the most prominent liquids-rich basins in the United States...

Aubrey K. McClendon, Chesapeake’s CEO, stated,

“We are pleased to announce further progress towards our asset sale goals for 2012-13. We look forward to completing additional asset sales and achieving our goals of strengthening our balance sheet, tightening our asset focus and increasing returns to shareholders.”

Read the full press release at AccessMidstream.com

DCP Plans New Eagle Ford Gas Processing Plant Near Goliad

December 11, 2012 R.T. Dukes

DCP Midstream along with DCP Midstream Partners plans to build a 200 mmcfd cryogenic processing plant near Goliad, TX. The Goliad Plant has an expected completion date of early 2014.

It will be the seventh plant owned by DCP in South Texas and adds to the company's significant position.

DCP's Eagle Ford System is highlighted by:

6,000 miles of gathering lines
>1 Bcfd of processing capacity
3 fractionators with capacity of 36,000 b/d
Access to the Sand Hills NGL pipeline
Long-term commitments supported by 900,000 acres in the Eagle Ford.

“The Goliad plant is another great example of co-investment with our general partner. ”

— Bill Waldheim, president of DCP Midstream Partners

The Goliad plant will the the third plant in approximately 18 months brought online by the company is South Texas. The 200 mmcfd Eagle Plant will be online in the fourth quarter of 2012 and the 200 mmcfd Pettus Plant is has an in-service date of late 2013 or early 2014. The Goliad Plant is expected to be online in early 2014 as well.

Plains All American is Buying US Dev Group's Eagle Ford Crude Terminal

December 10, 2012 R.T. Dukes

Plains All American Pipeline (PAA) has reached a $500 million deal to buy four rail facilities from U.S. Development Group. One of those facilities is part of the Gardendale Rail System near Cotulla, TX.

The four facilities are rail terminals:

Van Hook Crude Terminal - New Town, ND (servicing the Bakken)
Niobrara Crude Terminal - Carr, CO
Eagle Ford Crude Terminal - Cotulla, TX
St. James Rail Terminal - St. James, LA

The three crude terminals have daily loading capacity of 85,000 b/d and the rail terminal at St. James has unloading capacity of 140,000 b/d. An unloading facility is also planned for Bakersfield California.

“Plains has proven to be a great terminal and pipeline partner for USD, and we believe that this transaction will provide for the most efficient optimization of the assets involved.”

— Dan Borgen, U.S. Dev. Group CEO

The Eagle Ford Crude Terminal receives oil by truck near Cotulla, TX, in the community of Gardendale. It's just off I-35 80 miles south of San Antonio. The facility has capacity for 200 loaded rail cars, and can move as much as 40,000 b/d. The terminal is serviced by Union Pacific Railroad and the Gardendale Railroad. Crude moving from the terminal ends up in St. James, LA, where the facility can handle 300 loaded railcars at one time or 130,000 b/d. The St. James Rail Terminal also ties into several pipelines, including one owned by PAA.

"These assets represent a very attractive addition to our existing North American rail activities...." said Greg L. Armstrong, Chairman and CEO of PAA. "Given recent and projected increases in North American crude oil production and volumetric and quality imbalances expected to occur in certain regions over the next several years, we believe that strategically located rail loading and unloading assets will continue to play an important role in the transportation of crude oil in North America."

Crude oil pricing is as dynamic as ever across the U.S. Growing production in the Bakken and West Texas have put downward pressure on WTI (priced at Cushing, OK). On December 10, 2012, WTI was trading at ~ $86.50 / bbl and Brent crude was trading a little over $108 / bbl. That's a wide spread that creates attractive crude by rail economics. Plains also has an extensive NGL rail network and expects to have as many as 6,700 rail cars under lease by year-end 2013.

Plains All American Pipeline's company wide crude oil loading capacity is now 250,000 b/d and unloading capacity is 335,000 b/d on the East Coast, Gulf Coast, and West Coast.

Read the full press release at paalp.com

Teak Midstream's Eagle Ford Gathering & Processing Begin Operations

November 29, 2012 R.T. Dukes

Teak Midstream has started operations at its South Texas gathering system and its Silver Oak (200 mmcfd) cryogenic processing plant. Teak has long-term midstream agreements with Comstock Resources, Statoil, and Talisman. With significant commitments, the company already plans to expand its gathering system by 200 mmcfd by the first quarter of 2014.

At the center of the development is Teak's Silver Oak Processing Plant, which is located near the community of Pettus, between Beeville and Kenedy in Bee County. The plant is specifically designed to handle high concentrations of liquid-rich gas. From the plant, residue gas will be transported by a 20-inch, 57 mile pipeline to various interstate pipelines and NGLs will be transported by a 12-inch, three mile pipeline to DCP's Sand Hills Pipeline. The Sand Hills pipeline ultimately delivers NGLs in Mont Belvieu.

“Teak Midstream is well positioned to serve new and existing customers who are pursuing liquids-rich gas in the Eagle Ford and other formations in South Texas. The proximity of our extensive gas gathering systems to escalating drilling activity is ideal, and our processing plant has extremely high NGL recoveries, making it one of the most efficient facilities in the region, which can improve wellhead value for our customers,” said TEAK Co-Chief Executive A. Chris Aulds. “

Teak Midstream's new gathering system actually includes two separate systems:

One system is 178 miles of 24-inch and 16-inch pipelines that moves wet gas from Dimmit through Webb, La Salle, McMullen, and Live Oak counties on to the Silver Oak Plant
The second system is 22-miles of 20-inch pipe moving rich gas from the Karnes area to the Silver Oak Plant in Bee County

NuStar Buying Eagle Ford Midstream Assets - Selling San Antonio Refinery

November 12, 2012 R.T. Dukes

NuStar Energy has agreed to buy Eagle Ford midstream assets from TexStar Midstream for $425 million. The deal will be completed in two pieces - crude oil assets then NGL assets.The crude oil system moves through La Salle, Frio, and Live Oak counties moving 60,000 b/d, with the potential to move as much as 100,000 b/d.

NuStar will also sell its San Antonio refinery and associated terminal in Elmnedorf, TX. The refinery refines a little more than 14,000 b/d of crude and is being sold as part of the company's strategy to move away from margin based businesses. NuStar has approximately $90 million invested in the refinery to date.

“The TexStar acquisition and refinery divestiture are the next critical steps in our strategic redirection of NuStar away from the margin-based refining and marketing business in order to further grow our fee-based pipeline and storage operations through internal growth projects and acquisitions,” said NuStar President and CEO Curt Anastasio. “NuStar was actually the first company to move Eagle Ford crude by pipeline, and we are fortunate to have extensive pipeline and terminal assets already in operation throughout the Eagle Ford region.

NuStar see's a very bright investment climate in South Texas. The company stated there are more high return opportunities in fee based transportation and storage projects than they have ever had in the history of the company. Expect to hear more from NuStar as the company builds additional pipelines in infrastructure in the region.