Tag Archives: DCP Midstream

Spectra Energy to buy stake in two NGL pipelines in US

US-based natural gas infrastructure company Spectra Energy has entered an agreement with DCP Midstream and Phillips 66 to buy one-third stake in two natural gas liquids (NGL) pipelines in Texas, US.

The two under construction NGL pipelines, Sand Hills Pipeline and Southern Hills Pipeline, are currently being developed by DCP Midstream which is a 50-50 joint venture company between Spectra Energy and Phillips 66.

Upon closing of the deal, the three companies will each own one-third interest in the two pipelines and will equally contribute funds for the completion of Sand Hills and Southern Hills pipelines.

Spectra Energy did not disclose the value of the agreement but is expected to invest $700m to $800m in the two pipeline projects.

Spectra Energy president and chief executive officer Greg Ebel said the pipeline projects will complement the company’s current pipeline network in North America.

“As these NGL pipelines begin serving customers later this year and in 2013, they will directly add attractive, stable earnings and cash flow to Spectra Energy’s results,” Ebel added.

The Sand Hills is a 720 miles and 20in pipeline which will transports NGL from Permian Basin and Eagle Ford Shale to key markets on Gulf coast. The initial capacity of 200,000 barrels per day (bpd) can be increased to 350,000 bpd later.

It is expected to be operational in the second quarter of 2013.

The Southern Hills is a 900miles long pipeline which is being constructed to transport NGL from the Mid-Continent to Mont Belvieu in Texas.

It has an initial capacity of 150,000 bpd which can be expanded to 175,000 bpd. The pipeline is scheduled to begin services in mid-2013.

SOURCE: http://transportationandstorage.energy-business-review.com/news/spectra-energy-to-buy-stake-in-two-ngl-pipelines-in-us-021112

PVR’s Wyoming Pipeline Comes Online

PVR Partners, L.P. ( PVR ) announced the completion of construction activities of its latest natural gas trunk line in the north-central province of Pennsylvania. The midstream project, Wyoming Pipeline, also came online commercially. The pipeline system was initially constructed by Chief Gathering LLC until it got acquired by PVR Partners in May 2012.

The pipeline is 30 miles in length and spans across the northern Wyoming County southward to connect with the Transco interstate pipeline system in Luzerne County. The 750 million cubic feet per day (“MMcfd”) capacity system will provide midstream services to the producers operationally active in the Marcellus Shale play. The program was bankrolled by funds that were added in the financing agreement during the purchase of Chief Gathering.

Presently, the partnership has secured contracts for reliable and efficient services on the Wyoming Pipeline from five independent producers and expects more agreements to come on the table. These agreements are wholly fee based and are insulated from any direct commodity price risks. For 2012, the initial firm transportation volume contracted by the producers totaled 255 MMcfd.

We believe the acquisition of Chief Gathering LLC is a strategic fit and will be a profitable addition to the partnership’s asset portfolio. The timely execution of this cost-effective project will enable the partnership to carry out its high-quality programs in the Marcellus play smoothly and also contribute positively to its future business plans in the region.

The partnership faced constraints in supplying volumes from its Susquehanna/Wyoming gathering facility to the Tennessee Gas Pipeline 300 Line which impacted PVR Partners’ operations. However, the partnership expects the Wyoming Pipeline-Transco Pipeline connectivity will lead to increase in volumes on the Susquehanna/Wyoming gathering facility by more than 20%.

The ongoing developments at the Susquehanna/Wyoming gathering unit will enable supply volumes to Wyoming Pipeline to further expand with the linking of additional wells thereby increasing productivity.

Although natural gas prices are currently on a downhill, we anticipate with rising demand for electricity in the U.S., gas prices will improve steadily, which could add to the partnership’s near term top-line. Nonetheless, unexpected infrastructure outages and pipeline accidents are risks that could pose serious challenges to the partnership’s operations.

We remind investors that the partnership had divested its Crossroads natural gas gathering system and processing plant for roughly $63 million to DCP Midstream Partners, LP ( DPM ), in mid-June 2012, to focus on the development of its core midstream business in the Marcellus shale and Texas plays.

The Zacks Consensus Estimates for the third quarter and full year 2012 for PVR Partners are pegged at 9 cents per unit and 54 cents per unit, respectively. One of its competitors is Missouri-based Arch Coal Inc. ( ACI ).

The partnership owns and operates a string of natural gas midstream pipeline systems and processing plants and is also involved in the management of coal as well as natural gas properties. PVR Partners’ current market capitalization stands at $2.21 billion.

SOURCE: http://community.nasdaq.com/News/2012-10/pvrs-wyoming-pipeline-comes-online-analyst-blog.aspx?storyid=178825#ixzz28XP80bvO