Energy Transfer Partners LP (NYSE: ETP) and Regency Energy Partners LP (Nasdaq: RGNC) have reported that Lone Star NGL LLC, the joint venture that acquired the midstream assets of Louis Dreyfus Highbridge Energy, will construct a 100,000 barrels per day natural gas liquids (NGL) fractionation facility at Mont Belvieu, Texas.
ETP will utilize a substantial amount of this fractionation capacity to handle NGL barrels it will deliver from its Jackson County, Texas processing plant, which is supported by multiple ten year contracts with producers as a part of ETP’s Eagle Ford Shale projects. Additionally, Regency expects to provide barrels to this project.
Lone Star expects to have the fractionation facilities completed by the first quarter of 2013 at an estimated cost of between $350 and $375 million. As part of the project, Lone Star will develop additional storage facilities for y-grade liquids and other components. The project will also include interconnectivity infrastructure to provide NGL suppliers and NGL markets with significant access to storage, other fractionators, pipelines and multiple markets along the Texas and Louisiana Gulf Coast.
"There is a growing demand for fractionation capacity, storage capacity and interconnectivity at Mont Belvieu and this is the first major step toward becoming an even larger service provider in the Mont Belvieu area," said Greg Bowles, senior vice president of Lone Star. "This project is strategic for our long-term growth plans and demonstrates the types of opportunities we intend to pursue to provide our customers comprehensive services in the liquids energy markets."
In addition to the Lone Star fractionation project, ETP has advised Lone Star that it is in negotiations with other pipeline operators to secure pipeline capacity that will provide NGL transportation from Jackson County to Mont Belvieu. In the event ETP determines it is more prudent to build a new pipeline rather than secure pipeline capacity through another pipeline operator, ETP has advised Lone Star that it will construct a 130-mile, 20-inch pipeline from its Jackson County NGL processing facility to Mont Belvieu. ETP has also advised Lone Star that the NGL pipeline from its Jackson County facility would provide capacity for barrels currently contracted by ETP and would be able to accommodate significantly more barrels from the Eagle Ford Shale or from a potential NGL pipeline from west Texas. The capacity of the 20-inch pipeline would be approximately 340,000 barrels per day.
Hess intends to use the MLP as the primary midstream vehicle to support its Bakken production growth.
The $10 billion Cameron project is slated to produce 12 million tons of LNG a year starting 2018.