DCP Midstream LLC and Targa Resources Partners LP have entered agreements that provide a long-term anchor commitment to the DCP Midstream Sandhills Pipeline LLC and an interconnection of the proposed Sandhills Pipeline to a new delivery point with Targa’s Cedar Bayou Fractionators LP facility (CBF) at Mont Belvieu, TX. DCP is in negotiations with several customers to sign long-term commitments to the Sandhills Pipeline.
Additionally, DCP and Targa announced jointly their entry into an agreement for a long-term anchor commitment by DCP for a new, 100,000 bpd fractionation expansion at the Targa-operated and majority-owned CBF facility located at Mont Belvieu.
DCP initiated an open season in November 2010 and is in the process of securing right-of-way and environmental permits for the Sandhills Pipeline. The new, 700-mile pipeline system will transport Y-grade natural gas liquids (NGLs) from gas plants in the Permian Basin and South Texas to the various fractionator facilities along the Gulf Coast along with the Mont Belvieu NGL hub.
The Sandhills Pipeline will serve the NGL transportation needs of Targa’s gas plants, existing DCP gas plants and the new 200 MMcf/d DCP Eagle gas plant designed to serve Eagle Ford Shale gas development. In addition, DCP is securing long-term commitments from other third-party shippers.
The Sandhills Pipeline and CBF are coordinating these projects toward a first half of 2013 completion of construction and commencement of operations.
Significantly, the Sandhills Pipeline along with CBF’s new fractionation expansion will allow DCP to provide a full scope of midstream energy services to handle producers’ increased liquid-rich natural gas production from the new Avalon Shale/Bone Springs areas, as well as the Eagle Ford Shale area. Producers can be assured of transparent, fee-based transportation and fractionation services with deliveries to CBF’s fractionator, Targa’s associated storage and terminalling facilities as well as other facilities at the Mont Belvieu NGL hub.