DCP Midstream To Double Capacity In Denver-Julesburg Basin

September 2012, Vol. 239 No. 9

DCP Midstream LLC reports capital investments under way will double its processing capacity in the Denver-Julesburg Basin by the end of 2014.

As producers move more drilling rigs into basins where new technology is significantly increasing natural gas production, DCP has a strategy under way to build a one-stop services company to offer integrated solutions to its customers – including gathering, processing, natural gas liquids (NGL) transportation and fractionation services.

“The Denver-Julesburg Basin continues to reinvent itself, and the introduction of horizontal drilling is uncovering associated natural gas discoveries in the Niobrara Shale and Codell formations,” said Wouter van Kempen, president of DCP Midstream’s gathering and processing business unit.

“In this new phase of oil-driven development, volumes and infrastructure needs are accelerating. Given DCP Midstream’s prominent position in the basin, we have a strategic imperative to provide gas gathering, processing and transportation services to bring producers’ products to market,” he said.

DCP recently broke ground on the previously announced LaSalle Plant, west of LaSalle in Weld County, with a capacity of 110 MMcf/d and a completion date in the second half of 2013 in coordination with the start-up of the Front Range NGL pipeline.

DCP said it is simultaneously constructing two compressor stations, with one to the north and one to the west of the LaSalle Plant, and an associated gathering system, which are also expected to be in-service by the second half of 2013. DCP also submitted last month a permit application for the LaSalle gas plant that will reconfigure some of the plant operations and equipment, and will also enable a plant throughput of 160 MMcf/d, increasing gas processing capacity by 50 MMcf/d.

DCP expects to complete this effort at LaSalle in the second half of 2013, after it receives the necessary air permit. As with the other projects DCP is implementing, this LaSalle project will help significantly in DCP’s ability to move gas through the DJ Basin and on to market.

In addition, DCP received a revised air permit from the state of Colorado last month enabling operation of the Mewbourn II Plant, west of Platteville in Weld County, at its full design capacity of 160 MMcf/d, effectively increasing operational throughput in the plant by 35 MMcf/d this summer.

DCP has recently filed for a permit to build and operate the Lucerne II Plant, northeast of Greeley in Weld County, with a maximum capacity of 230 MMcf/d, and separate additional gathering system improvements including up to four compressor stations, with estimated service of those facilities by late 2014.

In addition to new processing capacity, DCP will improve reliability by extending the high-pressure gathering system grid connected to its processing plants. DCP is creating a “super system” in Weld County or a broad network of gathering and processing facilities that afford significant optionality and flexibility, which enables DCP to optimize its processing capacity.

The strategic development of super systems in DCP’s four main operating areas in major producing regions of the U.S. makes DCP one of the most reliable gathering and processing operators in the industry.

In total, DCP will increase its gathering and processing assets in the DJ Basin to nine natural gas processing plants with a total capacity of around 800 MMcf/d and natural gas liquids production of 70,000 bpd.

The recently announced Front Range Pipeline will also help producers in the DJ Basin maximize the value of their NGL production by providing connectivity to the premium Mont Belvieu, TX market. DCP, Enterprise Products Partners and Anadarko Petroleum are building an interstate NGL pipeline that will originate in Weld County. Initial capacity on Front Range is expected to be 150,000 bpd which can be expanded to approximately 230,000 bpd.

Connectivity to Mont Belvieu includes transportation via the recently announced Texas Express Pipeline, in which DCP Midstream Partners LP has acquired a 10% ownership interest. Texas Express Pipeline is expected to be completed by second quarter of 2013, and Front Range Pipeline is expected to be in service by fourth quarter 2013.

DCP said its gathering and processing growth projects in the DJ Basin along with its Front Range NGL pipeline project will provide producers the full, value chain service needed to accommodate their aggressive growth profiles in the basin.

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