(Midstream Business – May 2013) Fractionation Projects Abound (By Jennifer Postel)
http://www.midstreambusiness.com/
As natural gas liquid (NGL) production in the Northeast ramps up, the Texas Gulf Coast—thanks to the Mont Belvieu hub—still remains the king of the gas liquids market.
The U.S. Gulf Coast remains dominant in the race for fractionation capacity, even with natural gas liquid (NGL) production increasing in the Northeast. As NGL production intensifies, a host of new fractionation capacity is expected to come online to handle the anticipated surge making the swampy marshlands to the south a virtual mecca for U.S. produced NGLs.
There are a total of 27 announced U.S. fractionation projects, which are expected to add 1.3 million barrels (bbl.) per day of fractionation capacity, bringing the national capacity up to 4.3 million bbl. per day in the next few years. This will create cash and incentives for companies operating in this sector, RBN Energy analyst Callie Mitchell said.
“These facilities are gigantic, high-dollar investments and they take at least a year-and-a-half to complete,” Mitchell wrote on RBNEnergy.com. “This new capacity will generate lots of low risk fee-based revenue. But just as important, this fractionation capacity will provide the capability to turn additional Y-grade (raw NGL mix) into more valuable purity products.”
Salty dog
According to Mitchell, of the 27 fractionation projects, 14 will be located on the Gulf Coast and many will be situated around the Mont Belvieu, Texas, NGL hub—a place Mitchell calls “the big kahuna.” Lone Star NGL, ONEOK Partners, Enterprise Products and Targa Resources all have fractionation projects under construction in Mont Belvieu. By the end of 2014, there will be a total of 1.7 million bbl. per day of fractionation capacity operating in the Mont Belvieu area alone, which Mitchell says is more than 50% of what is nationally available today.
Mitchell, who has 30 years of energy industry experience and recently retired from The Williams Cos. after years as vice president of Enterprise Services, sees the “geological phenomenon” that is Mont Belvieu as one of the reasons the Gulf Coast is the reigning king of the NGL market, due in large part to the fact that it sits on top of one of the largest underground salt-dome formations in the world.
