DCP Midstream to buy, expand Conoco US pipeline
DCP Midstream has agreed to buy the Seaway Products Pipeline Co. from ConocoPhillips for between $750mn and $850mn, creating new natural gas liquids (NGL) transportation capacity from the US Mid-continent to Texas Gulf coast markets.
The pipeline will be renamed the Southern Hills Pipeline and converted from refined products service to a natural gas liquids (NGL) pipeline running more than 700 miles between two major NGL market hubs – Conway, Kan., and Mont Belvieu, Texas.
DCP Midstream will add a 130-mile extension 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, it said.
The pipeline will have a target capacity of close to 150,000 bpd of Y-grade NGLs, and be connected to several DCP Midstream processing plants and anticipated third-party NGL producers.
The pipeline is expected to have an in-service date as early as mid-2013.
DCP Midstream will operate Southern Hills as a common carrier pipeline, it said.
The pipeline will open new capacity for NGLs produced from growing Midcontinent, Rockies and Conway-bound supply.
DCP Midstream said it expects this new transportation capacity will help serve the growing need for Mid-continent transportation to the premium Mont Belvieu market and add value to DCP’s upstream producers.
“The Southern Hills conversion is a game changer for Mid-continent NGL values and a strategic fee-based value chain extension for DCP,” said Tom O’Connor, CEO of DCP Midstream.
“This critical piece of the midstream infrastructure puzzle will increase the value our producers realize for their growing Rockies and Midcontinent NGL production through enhanced connectivity to premium Gulf Coast markets,” O’Connor continued.
“And, with the ability to provide our customers with integrated gathering, processing and NGL transportation services through a timely solution that leverages pipe already in place, DCP’s competitive position is significantly improved.”
DCP Midstream said it expects to announce a request for a non-binding expression of interest in the pipeline from shippers later this year.
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