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Magical Mystery Tour, Part 4 - Mont Belvieu Fractionation Capacity and NGL Assets: ONEOK & GCF

For a while, the 840 Mb/d of NGL fractionation capacity that was added in Mont Belvieu, TX, between 2013 and 2016 — combined with the 1.2 MMb/d of capacity already in place before that four-year fractionator construction boom — was more than enough. But the run-up in NGL production in the Permian, SCOOP/STACK and other liquids-rich plays in 2017 and the first half of 2018 is quickly increasing the demand for fractionation services and challenging Mont Belvieu’s ability to keep up. Now, another 465 Mb/d of fractionator capacity is under development. Will they be finished soon enough? Will still more be needed? Today, we continue our review of fractionators, NGL and purity-product storage and other key infrastructure, this time with a look at ONEOK and Gulf Coast Fractionators’ assets.

This is Part 4 of our blog series on the need for more fractionation capacity in Mont Belvieu, the NGL capital of the world. This is a big deal.  Natural gas processors, NGL shippers, Gulf Coast steam crackers, and exporters of NGL purity products like ethane, propane and normal butane depend heavily on the big players in Mont Belvieu to efficiently receive and store mixed NGLs (y-grade), fractionate y-grade into purity products and either distribute those to U.S. end-users or pipe it to nearby marine terminals for loading onto ships. Of late, though, with NGL production soaring — and producers (until recently) reluctant to commit to new fractionation capacity — the existing fractionation plants in Mont Belvieu have been running flat-out to keep up. We’ve also heard that (at least in some cases) per-barrel fractionation costs have been rising in response to the tight fractionation-capacity situation.

In Part 1, we discussed rising NGL production in the Permian, the SCOOP/STACK and other key basins; potential U.S. NGL production — including ethane that is rejected into natural gas — is now approaching 5 MMb/d. We also 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. And we 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 started a company-by-company review of the Big Five 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. We also discussed the Enterprise-owned NGL pipelines that transport y-grade to Mont Belvieu, its NGL and purity-product storage, and its Houston Ship Channel export terminals for LPG and ethane. Then, we turned our attention to fractionation capacity owned by Targa Resources as well as Energy Transfer Partners. Last time, in Part 3, we looked at the fractionation assets of Cedar Bayou Fractionators (CBF) and Lone Star NGL. CBF, a joint venture (JV) that is 88% owned by Targa Resources, owns five fractionation plants in Mont Belvieu (combined capacity 453 Mb/d) and is building another 100-Mb/d fractionator that is scheduled to begin commercial operation in the first quarter of 2019. Lone Star NGL, a subsidiary of Energy Transfer Partners, owns 420 Mb/d of existing fractionation capacity at four plants in Mont Belvieu and has two new 120-Mb/d fractionators under development — one scheduled to come online the third quarter of 2018 and the other set to follow in the second quarter of 2019. Today, we train our focus on the fractionation plants owned by ONEOK and Gulf Coast Fractionators.

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