DCP Midstream ups Conway-Mont Belvieu NGL capacity

Christopher E. Smith
OGJ Pipeline Editor

HOUSTON, June 13 -- DCP Midstream will acquire the Seaway Products Pipeline Co. from ConocoPhillips, rename it the Southern Hills Pipeline, and convert it from refined products service to NGL service covering the more than 700 miles between NGL market hubs at Conway, Kan., and Mont Belvieu, Tex.

DCP Midstream will add a 130-mile extension from the pipeline’s current northern terminus to Conway and a 30-mile extension to Mont Belvieu, as well as pump capacity and associated gathering infrastructure to the current 580-mile pipeline. The pipeline will have a capacity of 150,000 b/d of Y-grade NGL, and be connected to several DCP Midstream processing plants and anticipated third-party NGL producers.

DCP Midstream will operate Southern Hills as a common carrier pipeline. The company expects it to enter service as early as mid-2013. DCP Midstream expects to announce a request for a nonbinding expression of interest in the pipeline from shippers later this year.

The acquisition and conversion will cost a total of $750-850 million.

DCP Midstream also entered into preliminary agreements with Occidental Petroleum Corp. for Oxy’s wholly owned subsidiary Occidental Chemical Corp. to provide right-of-way for the DCP Midstream Sandhills Pipeline LLC and for DCP to provide a supply option for a proposed new Oxy NGL fractionator in Ingleside, Tex.

The agreement with OxyChem will provide the Sandhills system with 14 miles of right-of-way and access to the Mont Belvieu fractionation complex. It also will help keep the Sandhills Pipeline project on track for a first-half 2013 start-up, DCP Midstream said.

DCP Midstream is in the process of securing the remaining right-of-way and environmental permits for Sandhills. The new 700-mile pipeline system will transport Y-grade NGL from gas plants in the Permian basin and South Texas to various fractionator facilities along the Gulf Coast, including Mont Belvieu.

Sandhills will ship gas from DCP’s 200-MMcfd Eagle gas plant, designed to serve the Eagle Ford shale gas development.

DCP Midstream says it is also securing long-term commitments from third-party shippers. DCP has completed agreements with West Texas LPG Pipeline LP to provide long-term NGL gathering services for Sandhills through two interconnect points with West Texas LPG.

Contact Christopher E. Smith at chriss@ogjonline.com.

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