New NGL fractionation facility to be built in Mont Belvieu, Texas

Energy Transfer Partners (ETP) and Regency Energy Partners will construct a 100,000 bpd natural gas liquids (NGL) fractionation facility at Mont Belvieu, Texas, through their Lone Star NGL joint venture.

The Lone Star NGL venture recently acquired the midstream assets of Louis Dreyfus Highbridge Energy, the companies said.

ETP will utilize a substantial amount of this fractionation capacity to handle NGL barrels it will deliver from its Jackson County, Texas, processing plant, which is supported by multiple 10-year contracts with producers as a part of ETP’s Eagle Ford Shale projects.

Additionally, Regency expects to provide barrels to this project, it said.

Lone Star expects to have the fractionation facilities completed by the first quarter of 2013 at an estimated cost of between $350-375mn. As part of the project, Lone Star will develop additional storage facilities for y-grade liquids and other components.

The project will also include interconnectivity infrastructure to provide NGL suppliers and NGL markets with significant access to storage, other fractionators, pipelines and multiple markets along the Texas and Louisiana Gulf coast.

“There is a growing demand for fractionation capacity, storage capacity and interconnectivity at Mont Belvieu and this is the first major step toward becoming an even larger service provider in the Mont Belvieu area,” said Greg Bowles, senior vice president of Lone Star.

“This project is strategic for our long-term growth plans and demonstrates the types of opportunities we intend to pursue to provide our customers comprehensive services in the liquids energy markets,” he added.

In addition to the Lone Star fractionation project, ETP has advised Lone Star that it is in negotiations with other pipeline operators to secure pipeline capacity that will provide NGL transportation from Jackson County to Mont Belvieu.

In the event ETP determines it is more prudent to build a new pipeline rather than secure pipeline capacity through another pipeline operator, ETP has advised Lone Star that it will construct a 130-mile, 20-inch pipeline from its Jackson County NGL processing facility to Mont Belvieu.

ETP has also advised Lone Star that the NGL pipeline from its Jackson County facility would provide capacity for barrels currently contracted by ETP and would be able to accommodate significantly more barrels from the Eagle Ford Shale or from a potential NGL pipeline from west Texas.