Different for NGLs - Permian Natural Gas Processing Plants and NGL Pipelines, Part 3

The year-ago completion of Energy Transfer Partners’ Lone Star Express NGL pipeline from West Texas to the Mont Belvieu storage and fractionation hub near Houston was a big deal. The new, 533-mile pipe increased effective NGL takeaway capacity out of the Permian by more than 25% and gave Energy Transfer a larger conduit for moving NGL produced at its Permian natural gas processing plants directly to the company’s still-growing complex of fractionators in Mont Belvieu. Energy Transfer also owns another big NGL pipeline out of the Permian: the Lone Star West Texas Gateway. Today we continue our blog series on the NGL side of the Permian with a look at what is currently the biggest fish in the play’s NGL pond.

All of the drilling going on in the Permian — 379 active rigs as of August 4, according to Baker Hughes — is focused on crude oil, but the 70,000-square-mile play in West Texas and southeastern New Mexico also produces large volumes of associated natural gas (about 6.5 Bcf/d as of this week, according to RBN’s NATGAS Permian report) and NGLs (nearly 800 Mb/d) that help to fatten producers’ wallets. The focus of this blog series is Permian NGLs: the natural gas processing plants that separate raw gas into dry gas and mixed NGLs and the pipelines that transport mixed NGLs (also known as y-grade or raw mix) to storage and fractionators, primarily in Mont Belvieu.

In Part 1, we took a big-picture look at Permian NGLs, noting that the play already had significant gas-processing and NGL takeaway capacity in place before interest in the Permian ramped up in 2015-16, and that the existing infrastructure — plus a few well-timed pipeline expansions — so far have provided sufficient (if not ample) capacity to move NGLs out of the play. We also pointed out, though, that the Permian’s effective takeaway capacity is limited by the facts that (1) not all of the NGL pipeline capacity out of the Permian is available for use by Permian NGL producers (some is used to move Rockies-sourced NGLs that flow through the Permian on their way to Mont Belvieu) and (2) a few of the Permian’s NGL takeaway pipelines run through other NGL production areas (including the Eagle Ford and Barnett shales) on the way to their final destinations, again limiting the volume of Permian NGLs that can be transported on those pipes.