Joint Venture to Build NGL Processing Plant, Pipelines

Two Houston-based oil and gas companies have formed a $240 million joint venture to build a NGL processing plant and pipelines in La Salle County, TX on the western edge of the Eagle Ford Shale.

The joint venture will be a 50-50 split between the two companies. Targa, which specializes in the storage, processing and transportation of natural gas and natural gas liquids, will contribute $125 million through its master limited partnership, Targa Resources Partners LP. Sanchez, the exploration and production arm of Sanchez Oil & Gas Co., which focuses on the Eagle Ford, will add $115 million.

The plant, which will service Sanchez’ Catarina field in the Eagle Ford, will have initial capacity 200 MMcf/d, but could eventually rise to 260 MMcf/d. The project will include 45 miles of pipelines to connect to the gas-gathering system Sanchez already operates in the region.

Targa Resources Partners will operate the plant and the pipelines. For the first five years of the project, Sanchez Energy will contribute 125 MMcf/d of production, but expects that amount to grow. All of Sanchez Energy’s natural gas production from the Catarina field will end up in Targa’s plant, which the two companies expect to be operational by 2017.

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