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Magical Mystery Tour, Part 7 - Can Planned Fractionation Capacity in Texas Avert a Crunch?

Fast-rising NGL production in the Permian, SCOOP/STACK and other plays is testing the ability of fractionators to keep up, and spurring the development of new NGL pipelines — and new fractionation plants, not just in the Mont Belvieu hub but elsewhere along Texas’s Gulf Coast. By our count, more than 1 MMb/d of new fractionation capacity is under development in the Lone Star State, and while some projects are more solid and certain than others, it’s fair to say we’re in for at least a mini-boom in fractionator construction after a multiyear lull. Today, we review the Texas fractionation projects being planned and begin assessing whether they will come online as quickly as they will be needed.

This is Part 7 of our blog series on existing and planned fractionation assets in Texas, which has far more fractionation capacity than any other state. Part 1 set the stage. There, we discussed the fact that potential U.S. NGL production — including ethane that is rejected into natural gas — is now approaching 5 MMb/d, and noted that a number of new, ethane-consuming steam crackers are coming online along the Texas and Louisiana Gulf Coast, conveniently close to the NGL storage and fractionation hub in Mont Belvieu (30 miles east of Houston). We also talked about the strong export market for liquefied petroleum gas (LPG) — propane and normal butane — which has averaged more than 1 MMb/d in the first half of 2018 (almost all of it being shipped out of Gulf Coast ports), and for ethane exports too. In Part 2, we began a company-by-company review of the five big fractionation players in Mont Belvieu with a look at Enterprise Products Partners, which has more fractionators (nine) and more fractionation capacity (755 Mb/d) than anyone else there. Then, in Part 3, we looked at the fractionation assets of Cedar Bayou Fractionators (CBF; a joint venture 88%-owned by Targa Resources) and Lone Star NGL, a subsidiary of Energy Transfer Partners, and, in Part 4, we discussed the fractionation plants owned by ONEOK and Gulf Coast Fractionators at Mont Belvieu. In Part 5 and Part 6, we reviewed fractionation capacity and other key NGL-related assets located elsewhere in Texas — that is, not in Mont Belvieu.

To sum up, there is currently just over 2.1 MMcf/d of fractionation capacity in Mont Belvieu — 755 Mb/d at Enterprise (including 85 Mb/d that came online in June), 453 Mb/d at Cedar Bayou Fractionators, 420 Mb/d at Lone Star NGL, 340 Mb/d at ONEOK and 145 Mb/d at Gulf State Fractionators. Within Mont Belvieu’s reach (via pipelines) are a number of ethylene plants (steam crackers) that consume the NGL purity products separated by fractionators (ethane, propane, normal butane, isobutane and natural gasoline), as well as marine terminals for purity-product exports. These include the Enterprise Hydrocarbons Terminal (EHT), which (among other things) can load and export liquefied petroleum gas (LPG; propane and normal butane); Enterprise’s Morgan’s Point Ethane Export Terminal (ethane); Targa’s Galena Park Marine Terminal (Houston Ship Channel; LPG); and Energy Transfer Partners’ LPG export terminal in Nederland, TX. As for the rest of Texas, 12 companies or joint ventures own a total of just over 1 MMb/d of fractionation capacity currently in place, most of it within 100 miles of the Gulf Coast between Beaumont and the Corpus Christi area. More steam crackers are located along this swath of coast, as is Phillips 66’s Freeport (TX) LPG Export Terminal.

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