Phillips 66 Plans Gulf Coast Fractionator

April 4, 2013 R.T. Dukes

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.

Natural Gasoline From The Eagle Ford Headed North?

March 21, 2013 R.T. Dukes

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.

Net Midstream Plans Eagle Ford Pipeline To Mexico from Nueces County

February 25, 2013 R.T. Dukes

Net Midstream announced plans for a 42-inch, 124 mile pipeline from Nueces County to Starr County in South Texas. The pipeline is backed by a 2.1 Bcfd transportation contract with MGI Supply ltd (PEMEX Subsidiary). If the pipeline runs at capacity, it will more than double current exports to Mexico.

The natural gas will be transported from the Agua Dulce hub in Nueces County to a point near Rio Grande City in Starr County.

“If the Net Mexico Pipeline moves 2.1 Bcfd, it will more than double current natural gas exports to Mexico. ”

In the past two years, US natural gas flows into Mexico have increased to approximately 2 Bcf/d. That's up from less than 1 Bcf/d at the beginning of 2010. Demand for natural gas in Mexico is rising as natural gas production is falling. Compare US natural gas prices to LNG prices and you begin to see why Mexico is after US natural gas. It's cheap! An $8 billion pipeline expansion of Mexican infrastructure is already planned. More than $3 billion will be spent expanding pipelines in Northern Mexico where the Net Mexico Pipeline will connect.

“NET Mexico Pipeline will be an important source of supply to meet Mexico’s growing demand for natural gas” said Joe Gutierrez, Co-President of NET. “Welook forward to this exciting new partnership with MGI and PEMEX Gas. NET Mexico is a natural next step in our pipeline system, as we connect abundant gas supply from the Eagle Ford Shale to expanding power generation and industrial markets in Mexico."

Net Midstream already operates a 30-inch, 150 mile pipeline that originates at the Brasada Processing Plant (operated by Western Gas) in La Salle County Texas. That is one Eagle Ford source and I bet we'll see others as gas production grows. Natural gas prices in Mexico are more favorable (higher), so producers will enjoy a transportation route that avoids Henry Hub.

Net Midstream also operates a pipeline that delivers gas to a 200 MW power plant in La Salle County and a 30-mile pipeline that serves the City of Corpus Christi.

Read the full press release here.

Howard Energy Investing $100 Million in Eagle Ford Processing & Rail

February 7, 2013 R.T. Dukes

Howard Energy Reveille Plant Webb County TX

Howard Energy Partners is set to invest $100 million total in a processing plant in Webb County and a rail facility Live Oak County.

You can read more on the railroad in a previous article - Live Oak Railroad Near Three Rivers Coming. The facility will have 28,000 ft of track and is expected to open in the first half of 2013.

In Webb County, a cryogenic processing plant that has the capacity of 200 mmcfd. The plant is being built to serve growing demand from wells targeting the Eagle Ford, Escondido, and Olmos formation.

Kinder Morgan - Copano Reach $5 Billion Deal

January 30, 2013 R.T. Dukes

Kinder Morgan and Copano Energy have reached a $5 billion agreement whereby KMP will acquire Copano. The transaction prices Copano at a 23.5% premium to its closing prices on January 29, 2013. The combined company has over 80,000 miles of pipelines and more than 180 terminals. The deal is expected to close by the third quarter of 2012

Richard Kinder, CEO stated, "The footprint we now control has never been paralleled........I'm absolutely convinced US natural gas is the future of energy......everything points to infrastructure being the biggest hurdle to continued growth.....We're seeing increased use of US hydrocarbons in every portion of the economy."

Copano's assets are centered around the South Texas Eagle Ford, Fort Worth Basin Barnett Shale, Oklahoma's Woodford Shale & Mississippi Lime plays, and the Powder River Basin in Wyoming. The company has more than $1 billion in identified growth projects and Rich Kinder expects that number will grow once the assets are under KMP control. Copano operates:

6,900 miles of pipelines with 2.7 Bcf/d of throughput capacity
9 processing plants with 1 Bcf/d of capacity
315 mmcfd of treating capacity

Kinder Morgan will now own 100% of the two companies' Eagle Ford Gathering JV. Eagle Ford Gathering comprises approximately 400 miles of pipelines (including its capacity rights in certain KMP pipelines) with capacity to gather and process over 700,000 mmbtu/d.

Kinder plans to retain the "vast majority" of Copano's 415 employees and the company's Tulsa office.

KMP's Analyst day call will be streaming at kindermorgan.com until 2 pm CST.