By OGJ editors
HOUSTON, May 10 -- DCP Midstream LLC, Denver, and Targa Resources Partners LP, Houston, have reached agreements that will, according to the joint announcement, provide a “long-term anchor commitment” to DCP Midstream’s Sandhills Pipeline and an interconnect of the pipeline to a new delivery point with Targa’s Cedar Bayou fractionators’ plant at Mont Belvieu, Tex.
DCP is negotiating with several customers, it said, to sign long-term commitments to the Sandhills Pipeline.
Additionally, DCP and Targa reached a long-term anchor commitment by DCP for a new 100,000-b/d fractionation expansion at the Mont Belvieu plant, which Targa operates and of which it is majority owner.
According to Tom O’Connor, DCP Midstream’s chairman, president, and chief executive officer, the agreements are to cover increased production of NGLs from West and South Texas.
In November 2010, DCP Midstream began an open season and is currently securing right-of-way and environmental permits for the Sandhills Pipeline. The new 700-mile system will move Y-grade NGLs from gas plants in the Permian basin and South Texas to various fractionators along the Gulf Coast along with the Mont Belvieu NGL hub.
The Sandhills Pipeline will serve NGL transportation needs at Targa’s gas plants, existing DCP gas plants, and the 200-MMcfd DCP Eagle plant designed to serve Eagle Ford shale gas development. The Sandhills pipeline and CBF target first-half 2013 for completion of construction and start up.
Significantly, the Sandhills Pipeline along with CBF’s new fractionation expansion will allow DCP to handle producers’ increased liquid-rich natural gas production from the new Avalon Shale-Bone Springs areas, said the announcement, as well as the Eagle Ford shale area.