Spectra Energy, Phillips 66 Acquire Pipeline Interests

December 2012, Vol. 239 No. 12

Spectra Energy has reached an agreement in principle to acquire a one-third interest in the Sand Hills and Southern Hills pipelines, both of which are under construction by DCP Midstream, LLC, a 50/50 joint venture between Spectra Energy and Phillips 66.

Upon closing, Spectra , Phillips 66, and DCP Midstream each will own a one-third interest in the two pipelines – and will equally fund the remaining capital expenditures through completion of the pipelines. The aggregate investment by Spectra in the two pipeline projects is expected to be$700-800 million.

“Sand Hills and Southern Hills are outstanding natural gas liquids (NGL) pipeline projects that are a strategic complement to our network of natural gas pipelines across North America. Investing in these NGL pipelines, with our DCP Midstream joint venture partner Phillips 66, allows DCP Midstream to continue advancing its attractive growth plans,” said Greg Ebel, president and CEO, Spectra Energy.

The Sand Hills pipeline is designed to provide NGL transportation from the Permian Basin and Eagle Ford region to the premium NGL markets on the Gulf Coast. Sand Hills, which will have an initial capacity of 200,000 bpd and will be expandable to 350,000 bpd, is being phased into service with the first phase of the project recently coming online and providing service from the Eagle Ford. Direct connection to Mont Belvieu is expected by year end. The timing of Sand Hills’ second phase, which is the Permian portion of the pipeline, has advanced and is now due to be in service in mid-2013.
Southern Hills will provide 150,000 bpd, expandable to 175,000 bpd, of NGL transportation from the midcontinent to Mont Belvieu, TX and has a targeted in-service date of mid-2013.