DCP Midstream

Phillips 66 is probably best known for its fleet of complex refineries, but the Houston-based company also is involved in marketing, chemicals and midstream services. In fact, P66 is one of only a handful of midstreamers offering the full range of “well-to-market” or “well-to-water” NGL services — everything from associated-gas gathering systems and gas processing to NGL pipelines, storage, fractionators and export facilities. And P66’s standing among NGL midstream providers has only been enhanced by the recent doubling of its ownership interest in DCP Midstream. In today’s RBN blog, we continue our series on major NGL networks with a look at P66’s NGL-related assets, most of which run from the Rockies, West Texas and South Texas to the NGL hubs in Mont Belvieu and Old Ocean, TX. 

The recently announced combination of DCP Midstream LLC and DCP Midstream Partners LP creates the nation’s largest natural gas processor and natural gas liquids producer at what may be a particularly opportune time. The newly formed DCP Midstream LP, operating as a master limited partnership, owns 61 gas processing plants with a combined capacity of 7.8 Bcf/d—enough to process more than 10% of current U.S. production—as well as 12 fractionation plants, 59,700 miles of gas gathering pipelines and 4,600 miles of NGL pipelines. Better yet, many of these assets serve some of the U.S.’s most prolific and promising production areas, including the Midland and Delaware basins within the Permian; the Denver-Julesburg (DJ); and the side-by-side SCOOP and STACK plays. In today’s blog, we review the combined entity’s assets and prospects for growth in what soon may be happier times for NGL processors.

General Partners Phillips 66 and Spectra Energy control midstream Master Limited Partnership (MLP) DCP Midstream Partners (DPM). The partnership owns midstream transportation and processing assets along the natural gas and natural gas liquids (NGL) supply chain. Similar to many MLPs its Limited Partner unit price has declined by more than 50% in the past year. Despite exposure to difficult market conditions in the Eagle Ford and East Texas, a strong performance from the NGL logistics segment is expected to propel a 20% gain in net income between 2015 and 2017. Today we review our latest spotlight analysis report on DPM.

The recent collapse in oil prices has thrown into question the future levels of crude, natural gas and NGL production in, among other places, the Permian Basin and the Eagle Ford. That will lead midstream companies to take a fresh look at the two regions’ existing and planned infrastructure to make sure they still are in line with pipeline, processing and other needs. Today, we conclude our series on the two regions’ natural gas processing plants, NGL pipelines and fractionators with a look at where we stand, and what’s ahead.

It remains to be seen to what extent the recent crash in oil prices--and the sympathetic decline in prices for natural gas liquids (NGLs) - will lead to major drilling and production pull-backs in some U.S. shale plays. What seems clear, though, is that the higher-grade, liquids-rich areas at the heart of the Eagle Ford and Permian Basin will continue to experience at least modest levels of drilling activity and still-strong production for some time to come.   That should provide considerable relief to the midstream companies that have been investing heavily in NGL infrastructure in the Eagle Ford and Permian the past few years. Today, we continue our company-by-company look at existing and planned natural gas processing plants, fractionators and NGL pipelines in two of the most productive plays in the U.S.