Robert Brelsford
Downstream Technology Editor
Recent clarifications by the US Bureau of Industry regarding the export of condensate amid growing supplies of domestic oil and gas shale production have sustained expansions of fractionation and splitting capacity by US and Canadian operators (OGJ Online, Jan. 2, 2015). While uncertainty about the future of US crude exports looms, midstream operators are advancing most previously announced projects.
NGL fractionation capacity
Keyera Corp. continued to advance its plan to expand NGL fractionation and storage in Fort Saskatchewan, Alta. (OGJ, June 2, 2014, p. 72; Newsletter, Jan. 13, 2014).
Expansion of the fractionator to handle a C3+ NGL mixed stream of propane, butane, and condensate will more than double C3+ capacity to 65,000 b/d from 30,000 b/d and will include new product receipt, operational storage, and pipeline interconnections.
Engineering design and site preparation for the project are ongoing, with start-up still on track for first-quarter 2016, Keyera said in its March 2015 corporate overview.
The expanded C3+ capacity will be in addition to start-up of the Fort Saskatchewan complex's capacity to fractionate about 30,000 b/d of C2+ mix after Keyera commissioned a long-planned de-ethanizer (OGJ Online, Sept. 11, 2012) at the site in first-quarter 2015, the company said in March.
At Keyera's Rimbey gas plant, about 62 miles southwest of Edmonton, Alta., debottlenecking of an existing 31,500-b/d fractionator is planned during second-quarter 2015, the company told investors in April. The project will expand the unit's capacity by about 6,900 b/d.
Late last year, Enterprise Products Partners LP (EPP) announced plans to build a ninth NGL fractionator for its complex in Mont Belvieu, Tex. (OGJ Online, Sept. 29, 2014). The fractionator will have a nameplate capacity of 85,000 b/d and could begin operations as early as January 2016.
The addition will give EPP a gross nameplate NGL fractionation capacity of 755,000 b/d at Mont Belvieu and total gross NGL fractionation capacity of 1.2 million b/d. Mont Belvieu also will be capable of producing 265,000 b/d of propane.
EPP has secured the required permits and emission credits for both the ninth and a similarly-sized tenth NGL fractionator at Mont Belvieu. The complex is complemented by the partnership's network of NGL supply and distribution pipelines, more than 110 million bbl of salt-dome storage, and access to international markets through its LPG and ethane export terminals, currently under construction (OGJ Online, July 31, 2014; June 12, 2014; and Apr. 22, 2014).
EPP commissioned its eighth fractionator at Mont Belvieu in November 2013 (OGJ Online, Nov. 19, 2013).
In November last year, Lone Star NGL LLC, a joint venture of Energy Transfer Partners LP (70%) and Regency Energy Partners LP (30%), began construction of a third 100,000-b/d NGL fractionation unit at Mont Belvieu (OGJ Online, Nov. 6, 2014).
Fully subscribed by multiple long-term contracts, the fractionator is necessary to handle the increasing NGLs delivered via ETP's and Lone Star's raw-make pipelines that gather NGLs from Permian, Eagle Ford, and North Texas production.
Estimated by the companies to cost $420-430 million, the fractionator is to be in operation by December 2015.
The new fractionator will combine with the 100,000-b/d Lone Star Frac II fractionator, placed into service in November 2013 (OGJ Online, Nov. 4, 2013), and the 100,000-b/d Frac I unit commissioned in 2012 (OGJ, May 7, 2012, p. 88; June 6, 2011, p. 88), both of which receive NGLs from production from the Permian basin, Eagle Ford shale, and other producing regions via several sources, including Lone Star's West Texas NGL pipelines and ETP's Justice NGL pipeline (OGJ, June 2, 2014, p. 86).
Lone Star also plans a fourth NGL fractionator at Mont Belvieu (OGJ Online, May 5, 2015). The 120,000-b/d unit, due by December 2016, will cost about $450 million.
Earlier this year, Kinder Morgan Inc. (KMI) agreed to acquire Hiland Partners from founder Harold Hamm and certain Hamm family trusts for $3 billion, including the assumption of debt (OGJ Online, Jan. 22, 2015).
The assets, mostly fee-based, consist of crude oil gathering and transportation pipelines and gas gathering and processing systems, primarily serving production from the Bakken shale in North Dakota and Montana.
Hiland's gas gathering and processing systems in North Dakota and Montana consist of 1,800 miles of gathering pipelines and, upon completion of a plant expansion this year, 240 MMcfd of gas processing capacity and 30,000 b/d of fractionation capacity.
KMI says the deal, which closed in February, includes a "significant amount of acreage dedicated under long-term gathering agreements." Hiland's customers include Continental Resources Inc., Oasis Petroleum Inc., XTO Energy Inc., Whiting Petroleum Corp., and Hess Corp., among others.
Kinder Morgan Energy Partners LP is continuing to develop its joint venture with Targa Resources Partners LP to build new NGL fractionation at Mont Belvieu to serve producers in the Utica and Marcellus shales in Ohio, West Virginia, and Pennsylvania (OGJ, June 2, 2014, p. 72; OGJ Online, Dec. 20, 2013).
To allow producers and shippers time to assess their Gulf Coast fractionation and pipeline needs, Kinder Morgan and Targa extended until Feb. 28, 2014, a binding open season for the Utica Marcellus Texas Pipeline (UMTP), a proposed joint venture between MarkWest Utica EMG LLC and Kinder Morgan. Pending approval by the US Federal Energy Regulatory Commission, UMTP will involve abandonment and conversion to liquid service of more than 1,000 miles of Kinder Morgan's existing Tennessee Gas Pipeline natural gas system from Mercer, Pa., to Natchitoches, La., and construction of about 200 miles of new pipeline from Natchitoches to Mont Belvieu.
Discussions remain ongoing with potential shippers, with an anticipated in-service date in fourth-quarter 2018, according to the company's website.
The new fractionator will sit adjacent Targa's existing capacity at Mont Belvieu and provide fractionation for shippers on UMTP of up to 150,000 b/d and potentially serve up to 400,000 b/d of maximum pipeline capacity.
In December 2014, Oneok Partners LP completed a second 75,000-b/d NGL fractionator, MB-3, at its Mont Belvieu NGL storage site, according to a March 2015 investor presentation.
At an estimated $525-575 million, the project is to meet growing demand from petrochemical companies for ethane and propane feedstocks and will include related infrastructure and storage capacity.
A year ago, the US Environmental Protection Agency (EPA) issued a final greenhouse gas (GHG) prevention of significant deterioration (PSD) construction permit to Oneok Hydrocarbon, an operating subsidiary for Oneok Partners, for expansion of the company's fractionator at Mont Belvieu, east of Houston (OGJ Online, June 23, 2014).
The permit allows Oneok to build two new units at an estimated cost is $800 million. Oneok Partners owns the third-largest NGL fractionation capacity at Mont Belvieu, with its current capacity of 235,000 b/d.
Oneok holds an 80% interest in and operates MB-1, a 160,000-b/d NGL fractionator (OGJ Online, Apr. 15, 2013), and has a long-term, third-party fractionation-services agreement for an additional 60,000-b/d NGL fractionation capacity. In addition to MB-1, in December 2013 Oneok completed its $375 million, 75,000-b/d MB-2 fractionator at Mont Belvieu.
Phillips 66 began construction of a 100,000-b/d NGL fractionator near its 247,000-b/d Sweeny refinery in Old Ocean, Tex. (OGJ Online, Apr. 15, 2015; Dec. 11, 2014; Mar. 21, 2014).
As of April, construction on the fractionator was more than 70% completed, with the unit still on schedule to start up during this year's second half, the company said in its Apr. 10 earnings call for first-quarter 2015.
The move comes as part of the company's strategy to leverage its substantial existing assets at the US Gulf Coast as it continues to grow its midstream business to meet growing demand for domestic crude oil and global market demand for US-supplied products, Phillips 66 spokesman Dennis Nuss told OGJ in December.
The company also planned to reach a final investment decision for a 110,000-b/d Sweeny Fractionator 2, which if approved, would have been commissioned in 2017.
In response to market conditions amid the recent decline in global crude oil prices, however, Phillips 66 delayed the timing of investment decisions on a series of second-phase midstream projects in Texas, including plans to build a the second NGL fractionator, a crude and condensate pipeline, and a condensate splitter, it said in its 2014 annual report, issued in February this year.
In August, MarkWest Energy Partners LP, Denver, announced plans to expand midstream infrastructure at its Keystone complex in Butler County, Pa., to handle growing rich-gas production from the Marcellus shale and Upper Devonian formations, with new processing agreements with Rex Energy Corp. and EdgeMarc Energy will underwrite the expansion (OGJ Online, Aug. 26, 2014).
As part of these agreements, MarkWest will build Bluestone III and IV, each of which to handle 200 MMcfd and to begin operations in fourth-quarter 2015 and second-quarter 2016, respectively.
To complement the project, MarkWest intends to build 40,000 b/d of additional de-ethanization capacity and more than 20,000 b/d of additional propane and heavier fractionation capacity.
The Keystone complex currently consists of Bluestone processing and fractionation and Sarsen processing, which combined provide 210 MMcfd of processing capacity and 26,500 b/d of fractionation capacity (OGJ, June 9, 2014, Newsletter).
The Keystone complex is anchored by Rex Energy. MarkWest in May 2014 began operations of the 120-MMcfd Bluestone II plant and 10,000 b/d each of ethane and C3+ fractionation capacity to continue handling Rex Energy's growing rich-gas production. In addition to the Bluestone processing and fractionation plants, MarkWest completed a 32-mile purity-ethane pipeline connecting Bluestone to Sunoco Logistics Partners LP's Mariner West pipeline.
Blue Racer Midstream LLC, a 50:50 partnership between Dominion Midstream Partners LP and Caiman Energy II LLC, was due to expand fractionation capacity at its Natrium plant in West Virginia to 126,000 b/d from 46,000 b/d (OGJ, June 2, 2014, p. 72). Completion of the expansion, however, has been delayed to later during first-half 2015, with increased fractionation capacity scheduled for commissioning by yearend 2015, Dominion said in a Feb. 9 presentation to investors.
Condensate splitting, stabilization
The first 50,000 b/d unit of Kinder Morgan Energy Partners LP's new $400 million petroleum condensate processing facility along the Houston Ship Channel began operations during second-quarter 2015 and, by March, already was producing on-spec material. A second 50,000-b/d splitter is expected to begin service in July of this year, the company said in an Apr. 15 release.
The 100,000 b/d project is supported by a long-term, fee-based agreement with BP North America, according to Kinder Morgan.
Also in March 2014, Targa Resources Corp., Houston, announced it would build spend $115 million to build a 35,000-b/d condensate splitter at its Channelview, Tex., terminal on the Houston Ship Channel. Start-up would be late next year.
In December, EPA issued a final GHG of PSD construction permit to Magellan Processing LP for a $400 million condensate splitter project to be located at the company's existing bulk petroleum storage terminal in Corpus Christi, Tex. (OGJ Online, Dec. 12, 2014).
The permit allows Magellan to build, in two phases, a 100,000-b/d splitting plant consisting of two 50,000-b/d trains that will process hydrocarbon condensate material to obtain propane, butanes, light naphtha, heavy naphtha, kerosene, distillate, and resid, EPA said.
Each 50,000-b/d train will include a natural gas-fired hot oil heater, a natural gas-fired fractionator heater, storage tanks, and other associated equipment, which will require a total estimated capital cost of about $400-450 million.
While the approval covers an entire 100,000-b/d proposed plant, Magellan currently intends to proceed only with Phase 1 of the project, which includes the first 50,000-b/d train in accordance with plans the company announced early in 2014 (OGJ Online, Apr. 1, 2014).
"If warranted by additional demand, Magellan could proceed with Phase 2 of the project, which could provide an additional 50,000 b/d of capacity at our Corpus Christi facility," Bruce Heine, director of government and media affairs for Magellan, told OGJ.
"We requested permits for the full 100,000-b/d project initially so that we are poised to proceed with the second unit, if warranted by demand," Heine said.
The first $250 million phase of splitter construction, which is supported by a long-term commitment from Trafigura AG, will include 1 million bbl of storage, dock improvements, and two additional truck-rack bays and pipeline connectivity between Magellan's terminal and Trafigura's nearby facility, the company said in April.
EPA's permit approval for the proposed splitter means the project's first phase remains on track with Magellan's previously announced timeline for start-up during second-half 2016.
On Dec. 5, 2014, Phillips 66 filed an application with the Texas Commission on Environmental Quality for a permit to build a condensate splitter at its 247,000-b/d Sweeny refinery in Old Ocean (OGJ Online, Mar. 21, 2014).
In response to market conditions amid the recent decline in global crude oil prices, however, the company announced in April that it would delay an investment decision on the project for at least a year.
In Canada, Keyera Corp. began construction in 2014 to add 10,000 b/d of capacity for condensate stabilization at its Simonette gas plant, 57 miles southwest of Valleyview, Alta., to handle rising western Canadian natural gas production coming from the Montney geological horizon.
The company completed the stabilization project during first-quarter 2015, Keyera said in April.
