Rising natural gas liquids production in the Niobrara is increasingly straining existing pipeline capacity out of the region and has spurred midstreamers to propose various combinations of new pipelines, expansions to existing pipelines and pipeline conversions in order to ease constraints. One of the latest entrants is a joint venture of Williams and Targa Resources that would expand Rockies producers’ ability to move mixed NGLs to the Mont Belvieu, TX, hub for fractionation and marketing/export. Williams plans to build a 188-mile pipeline — Bluestem — that would extend from its Rockies-to-Conway, KS, Overland Pass Pipeline to Kingfisher County, OK. For its part, Targa will build a 110-mile extension of its new Grand Prix NGL pipeline from southern Oklahoma north into Kingfisher to connect with Bluestem. As part of the deal, Williams has also contracted substantial volumes on Grand Prix as well as at Targa’s fractionation facility at Mont Belvieu. Today, we discuss Williams and Targa’s plan.
We should begin by noting that while Williams for decades has been a dominant gas-processing player elsewhere in the Rockies — including the Green River-Overthrust, Piceance and San Juan production areas — it has only recently become a gas processor in the Niobrara’s Denver-Julesburg (D-J) Basin. The company and joint-venture partner KKR & Co. in July 2018 announced a nearly $1.2 billion deal to acquire Discovery DJ Services. Discovery started up its first gas processing plant in the D-J in Fort Lupton, in Weld County, CO (capacity, 60 MMcf/d) in the third quarter of 2017; that plant, now owned by Williams and KKR, recently underwent an expansion that increased its capacity to 260 MMcf/d. Williams also is planning four 225-MMcf/d processing plants in Weld County — Keenesburg I and II, both of which will come online later this year — and Milton I and II, which will start up in 2021 and as soon as 2022, respectively. That means that within three years or so, Williams may well have more than 1.1 Bcf/d of D-J gas processing capacity, making it a leading NGL producer in the play.
As we said in our recent Drill Down Report on Niobrara crude, natural gas and NGL infrastructure, the region has emerged as a fast-growing NGL production area, spurring pipeline takeaway constraints that producers and midstream companies have been taking steps to address. Currently, there are three NGL pipelines out of the Niobrara’s D-J and Powder River basins with a combined capacity of 417 Mb/d. The largest — at least for now — is the 245-Mb/d Overland Pass Pipeline (light blue line in Figure 1), which is co-owned by Williams and ONEOK and which runs 760 miles from Opal, WY (in the southwestern part of that state) to the Conway fractionation hub. [Overland Pass, which is operated by Williams, also receives mixed NGLs (y-grade) from ONEOK’s 135-Mb/d Bakken NGL Pipeline (yellow line). As its name suggests, that pipe transports y-grade from the Bakken in western North Dakota.]
To access the remainder of Better Way - Rockies NGL Production Gains Spur Williams/Targa Pipe-and-Frac Deal you must be logged as a RBN Backstage Pass™ subscriber.
Full access to the RBN Energy blog archive which includes any posting more than 5 days old is available only to RBN Backstage Pass™ subscribers. In addition to blog archive access, RBN Backstage Pass™ resources include Drill-Down Reports, Spotlight Reports, Spotcheck Indicators, Market Fundamentals Webcasts, Get-Togethers and more. If you have already purchased a subscription, be sure you are logged in For additional help or information, contact us at firstname.lastname@example.org or 888-613-8874.