Enterprise to build ethane export facility in Houston
Enterprise Products Partners LP will build its ethane export facility on the Houston Ship Channel. Enterprise has signed a 30-year agreement with the Port of Houston Authority for use of facilities adjacent to the partnership's existing Morgan's Point terminal. Enterprise also plans to construct a pipeline from its Mont Belvieu, Texas natural gas liquids fractionation and storage complex, providing direct access to ethane supply. As designed, the export terminal will have the capability to load fully refrigerated ethane at approximately 10,000 barrels per hour. The facility is expected to begin operations in the third quarter of 2016. In a note following the announcement, Global Hunter Securities called EPD a "best-in-class MLP with a diversified asset portfolio, simplified corporate structure, strong growth pipeline, excess distribution coverage ratio and an investment-grade balance sheet that positions the partnership for multiple years of distribution growth. In our view, EPD is one of the best positioned MLPs to benefit from the ongoing shale revolution in North America, which we believe is now increasingly tied to the US energy export growth story."
ExxonMobil ships first cargo from PNG LNG project
Exxon Mobil Corp. has shipped the first cargo of liquefied natural gas (LNG) from the $19 billion PNG LNG project. PNG LNG, operated by ExxonMobil affiliate ExxonMobil PNG Ltd., is expected to produce more than 9 tcf of gas over its estimated 30 years of operations. The first cargo is bound for Tokyo Electric Power Co. Inc. (TEPCO) in Japan.
Construction of PNG LNG began in 2010, and production from the first train started in April.
The PNG LNG project is an integrated development that includes gas production and processing facilities in the Southern Highlands, Hela, Western, Gulf, and Central provinces of Papua New Guinea. Approximately 435 miles of pipeline connect the facilities, which include a gas conditioning plant and liquefaction and storage facilities with capacity of 6.9 million tonnes of LNG per year.
The four major customers for the project's output are China Petroleum and Chemical Corp. (Sinopec), TEPCO, Osaka Gas Co. Ltd., and CPC Corp. Taiwan.
In addition to ExxonMobil PNG Ltd., co-venturers are Oil Search Ltd., National Petroleum Co. of PNG, Santos Ltd., JX Nippon Oil & Gas Exploration Corp., Mineral Resources Development Co. (representing landowners), and Petromin PNG Holdings Ltd.
Rose Rock to acquire CHK transportation assets
Tulsa, OK-based Rose Rock Midstream LP has executed a definitive agreement to acquire crude oil trucking assets from a subsidiary of Chesapeake Energy Corp. The acquisition includes 124 trucks, 122 trailers and miscellaneous equipment operating in Texas, Oklahoma and Ohio; approximately 200 employees; and term transportation agreement at market rates with Chesapeake Energy Marketing Inc., a wholly owned subsidiary of Chesapeake.
Following the close of the acquisition, Rose Rock will operate a fleet of more than 250 trucks with approximately 350 employees, servicing the Bakken, DJ/Niobrara, Eagle Ford, Granite Wash, Mississippi Lime, Permian, San Juan and Utica plays.
While no financial disclosure was made, management indicated the Barcas deal from August 2013 is indicative, said Baird Equity Research following the announcement. In the Barcas deal, Rose Rock acquired a comparable set of trucking assets (Rockies and Mid-con) for $47 million. Modeling this recent deal with that of the 8x EBITDA for the Barcas deal, assuming similar economics implies 3-5% accretion on a full-year basis, the analysts noted.
Canyon signs on with XTO, Apache in Permian
Houston-based Canyon Midstream Partners LLC has entered into gathering and processing agreements with XTO Energy Inc., a subsidiary of Exxon Mobil Corp., and Apache Corp. for midstream services on Canyon's James Lake System. In addition, Canyon announced it has expanded its cryogenic gas processing plant in Ector County, Texas (the "James Lake Plant") from 70 MMcf/d to 100 MMcf/d by adding a 30 MMcf/d cryogenic turbo expansion train. The James Lake Plant is part of Canyon's James Lake System, which currently consists of 60 miles of 12" trunkline and six field compressor stations providing low pressure gathering services to Ector, Andrews, Martin, Dawson, and Gaines counties, Texas. When completed in late 2014, the James Lake System will deliver residue gas into the El Paso Natural Gas pipeline and deliver NGLs to the Sand Hills pipeline and the Chaparral pipeline in Ector County. Canyon is also developing Phase II of the James Lake System, which will consist of a second 100 MMcf/d cryogenic gas processing plant in Martin County and 60 additional miles of 12" trunkline, which will expand the system's service territory into Howard and Borden counties, Texas. Canyon expects Phase II to commence operations in the first half of 2015.
Canyon is backed by $300 million in equity commitments from Kayne Anderson Energy Funds, Canyon management and certain institutional investors.
New midstream firm gets $500M investment
Privately-held Navitas Midstream Partners has received a line-of-equity investment of as much as $500 million from an affiliate of Warburg Pincus, New York. The three founding partners and top executives of Navitas Midstream are former executives of Copano Energy LLC, which Kinder Morgan Energy Partners LP acquired last year for approximately $5 billion.
MarkWest, EMG to expand fractionation complex
MarkWest Energy Partners LP and the Energy & Minerals Group (EMG) plan to add additional capacity at their Hopedale fractionation and marketing complex in Harrison County, Ohio, in order to meet growing natural gas liquids (NGLs) production in the Utica and Marcellus shale plays under new contracted commitments from numerous producer customers.
The Hopedale complex is jointly owned by a subsidiary of MarkWest and MarkWest Utica EMG LLC, a joint venture between the Partnership and EMG. The expansion will double the propane and heavier fractionation capacity at the Hopedale complex to 120,000 bbl/d and is expected to be operational in the first quarter of 2015. Once the Hopedale expansion is complete, MarkWest will operate 300,000 bbl/d of ethane and heavier fractionation capacity at four complexes in the Northeast. The partnership also has an NGL gathering pipeline connecting its Hopedale complex to its NGL infrastructure in the Marcellus shale play. NGL takeaway solutions to the Gulf Coast and international markets will be complementary to existing fractionation infrastructure and will provide producers with additional market outlets.
"As Northeast NGL production continues to grow, in-basin fractionation will be essential to support the ongoing development plans of our producers in the Utica and Marcellus," said Frank Semple, chairman, president, and CEO of MarkWest.
Global Hunter Securities began coverage of MWE with a Buy rating and $70 price target, noting the partnership is "one of the best positioned MLPs to benefit from growing production in the liquids-rich portions of the Marcellus and Utica."
Summit to acquire interest in Ohio Gathering JV
Summit Midstream Partners LLC (Summit Investments), the privately held company that owns and controls the general partner of Summit Midstream Partners LP, and MarkWest Energy Partners LP report that a subsidiary of Summit Investments has exercised its option to acquire a 40% equity interest in Ohio Gathering Company LLC and Ohio Condensate Co. LLC (together, Ohio Gathering) from affiliates of MarkWest and the Energy & Minerals Group (EMG).
In connection, Summit Investments reimbursed MarkWest and EMG approximately $377 million, which represents 40% of all Ohio Gathering capital contributions made to date.
Ohio Gathering owns, operates, and is developing significant midstream infrastructure in the southern core of the Utica shale play in southeastern Ohio, including, Harrison, Guernsey, Belmont, Noble, and Monroe counties. Through this joint venture, Summit Investments, MarkWest, and EMG expect to develop over $3 billion of natural gas gathering and condensate stabilization infrastructure. Ohio Gathering is currently gathering 181 MMcfd. Baird's research team attended Summit's analyst day in Dallas, confirming its bullish stance on SMLP units. "Management continues to be focused on execution in 2014, something it has consistently delivered on since the 2012 IPO. Unitholders have been handsomely rewarded with 150% return and 25% distribution growth since the IPO," the analyst noted.
BRIEFS
Bakken crude expected to contine to ride rail
"According to the North Dakota Pipeline Authority, Bakken rail outflow capacity totaled 965,000 bbl/d at the end of 2013, compared to 515,000 bbl/d of pipeline capacity. While some refineries are being built or planned for the area, most Bakken crude oil will continue to be moved out of the region to be processed at refineries in other parts of the country." — EIA's Today in Energy
Briefs Tall Oak building system in OK's CNOW
Tall Oak Midstream is building a 250 mile natural gas gathering and processing system in Oklahoma's CNOW play. Tall Oak's CNOW System is anchored by a long term acerage dedication from American Energy - Woodford and is supported by a $400 million equity commitment from EnCap Flatrock Midstream. The system's Battle Ridge cryogenic processing plant is expected to come into service in December 2014 with an initial capacity of 75 million cubic feet per day, expandable to 300 MMcf/d.
