Enterprise, Anadarko and DCP Midstream to build new NGL pipeline

HOUSTON, Texas, THE WOODLANDS, Texas and DENVER, Colo. - Enterprise Products Partners L.P., Anadarko Petroleum Corp. and DCP Midstream, LLC on April 12 announced an agreement to design and construct a new natural gas liquids pipeline that will originate in the Denver-Julesburg Basin in Weld County, Colo., and extend approximately 435 miles to Skellytown, Texas, in Carson County.

Each party will hold a one-third interest.

The new Front Range Pipeline, with connections to the Mid-America Pipeline system and the recently announced Texas Express Pipeline, will help producers in the DJ Basin maximize the value of their NGL production by providing reliable takeaway capacity and market access to the Gulf Coast, the largest NGL market in the United States.

Depending on shipper interest to an upcoming binding open commitment period, initial capacity on Front Range is expected to be approximately 150,000 barrels per day (b/d), which can be readily expanded to approximately 230,000 b/d.

Enterprise will construct and operate the pipeline, which is expected to begin service in the fourth quarter of 2013.

"We are very pleased to partner with Anadarko and DCP on this project, which will extend Enterprise's integrated pipeline network into the liquids-rich DJ Basin to address the area's NGL transportation constraints, providing flow assurance and market choice for producers," said Michael A. Creel, Enterprise president and chief executive officer.

"With the success and significant growth expected in Anadarko's liquids-rich Wattenberg HZ (horizontal) program, Front Range will provide needed access to premium markets, which enables us to capture the highest wellhead netbacks. When combined with the recent announcement by Western Gas Partners, LP to construct the Lancaster Plant in the DJ Basin, Front Range provides significant value to Anadarko and its stakeholders," said Danny Rea, vice-president of midstream for Anadarko.

Bill Waldheim, president of DCP Midstream's NGLs, Gas and Crude Oil Logistics business unit, said, "The DJ Basin for several years has been an attractive liquids-rich resource. Now, with the introduction of horizontal drilling and this new phase of oil-driven development, the volumes and the infrastructure needs are accelerating. In anticipation of growing volumes, DCP remains focused on the liquids transportation needs of the basin. Given the plant development under way in the DJ, DCP has a strategic need to provide open access transportation services to the higher-valued Mt. Belvieu market."

Penn Virginia buying Marcellus pipelines for $1 billion

NEW YORK - Penn Virginia Resources Partners L.P. (NYSE: PVR) said on April 10 that it will pay $1 billion to buy privately-held pipeline firm Chief Gathering LLC. Radnor, Pa.-based Penn Virginia said the acquisition will expand its presence in the Marcellus Shale in Pennsylvania and West Virginia.

Chief Gathering, which is owned by Chief E and D Holdings LP, is a midstream pipeline company with operating assets serving Marcellus Shale natural gas producers primarily in northeastern Pennsylvania.

Customers of Chief Gathering LLC include Chesapeake Energy Corp., Anadarko Petroleum Corp. and Exxon Mobil Corp.

Private-equity firm Riverstone Holdings LLC will be a significant owner of PVR units following the acquisition.

The transaction, when closed, will result in a major expansion of PVR's pipeline systems in the gas-rich Marcellus Shale.

PVR expects to finance the purchase through a combination of committed equity and debt. The transaction is expected to close in the second quarter of 2012, subject to regulatory clearances and other customary closing conditions.

Chief Gathering's assets include six natural gas gathering systems serving over 300,000 dedicated acres in Bradford, Lycoming, Sullivan, Susquehanna, Wyoming and Greene Counties, Pa., and Preston County, W. Va.. Additionally, Chief Gathering is currently constructing a new 750 MMcfd trunkline, anticipated to be in service in the third quarter of 2012, extending from northern Wyoming County to Luzerne County with a connection to Transco's interstate pipeline. PVR currently owns two gathering systems in Lycoming and Wyoming Counties, with a third system in early stage development in Susquehanna County.

William H. Shea, Jr., Chief Executive Officer of PVR's general partner, said, "We expect that by year-end 2013 our midstream business unit will account for almost 75 percent of PVR's EBITDA, up from 40-45 percent today. These assets, together with our Lycoming and Wyoming County gathering assets, position us well to capture significant midstream opportunities in six of the most prolific counties in the northeastern area of the Marcellus Shale. We believe that there are substantial operating synergies and capital cost savings to be realized because of the proximity of the PVR and Chief Gathering systems, and the connectivity to both the Transco and Tennessee interstate pipelines.”

All of the gathering, compression, and dehydration services for the Chief Gathering systems are provided under fee-based agreements with active Marcellus producers including Chesapeake, Anadarko, Statoil, Mitsui, EXCO/BG Group, ExxonMobil/XTO, Chief, Enerplus and Chevron.

As of February 2012, volumes on the Chief Gathering systems were approximately 235 MMcfd and volumes on PVR's Marcellus systems were approximately 210 MMcfd. The new Wyoming County trunkline has 15-year firm transportation volume commitments of 255 MMcfd for 2012, increasing to 355 MMcfd in 2013.

The purchase price of $1.0 billion, subject to adjustments to reflect, among other things, a Jan. 1, 2012, economic effective date of the acquisition, will be paid in a combination of cash and the issuance to Chief of $200 million in a new class of PVR limited partner interests ("Special Units"). The Special Units are substantially similar to PVR common units, except that the Special Units will not pay or accrue distributions until they automatically convert to common units, on a one-for-one basis once the Special Units have not received six consecutive quarterly distributions following issuance.

MarkWest announces producer agreement for East Texas processing expansion

MarkWest Energy Partners, L.P. (NYSE: MWE) on March 19 announced the execution of long-term gathering and processing agreements with Anadarko Petroleum Corp. (NYSE: APC) that will support the recently announced 120 million cubic feet per day (MMcf/d) expansion of the Partnership's cryogenic processing capacity in East Texas.

MarkWest will provide gathering and processing services to support Anadarko's liquids-rich development program within Panola County, Texas.

To provide critical midstream services to Anadarko and other producer customers that are expanding their drilling programs in East Texas, including Chevron, PetroQuest Energy, and Samson Lone Star, LLC, MarkWest is constructing the Carthage East plant, with cryogenic processing capacity of 120 MMcf/d, increasing total processing capacity in East Texas to 400 MMcf/d. In addition, Carthage East will expand the Partnership's gathering capacity in East Texas by 140 MMcf/d and residue gas outlet capacities by 60 MMcf/d.

Enterprise, Enbridge and Anadarko to develop Texas Express Pipeline

HOUSTON & THE WOODLANDS, Texas - Enterprise Products Partners L.P., Enbridge Energy Partners, L.P. and Anadarko Petroleum Corp. on March 6 announced that shippers have executed long-term contracts for capacity on the Texas Express Pipeline (TEP) being developed by the joint venture.

The shippers, which include unaffiliated shippers, have tendered 15-year, ship-or-pay transportation agreements containing volume commitments that total 232,000 barrels per day (b/d). The contracts also include an option provision allowing shippers to increase their volume commitment.

Originating near Skellytown in Carson County, Texas, the 20-inch diameter TEP mainline will extend approximately 580 miles to Enterprise's natural gas liquids (NGL) fractionation and storage complex at Mont Belvieu, Texas, and will provide access to other third-party facilities in the area.

The pipeline will provide much-needed takeaway capacity for producers in West Texas, the Rocky Mountains, southern Oklahoma and the Mid-continent area, giving them access to the largest NGL market along the Gulf Coast and the opportunity to maximize the value of their NGLs. Production from the Rockies, Permian Basin and Mid-continent will be delivered into TEP through Enterprise's existing Mid-America Pipeline System (MAPL) which extends north through Oklahoma into Conway, Kansas, and south into the Permian Basin.

"This joint venture with Enbridge and Anadarko brings together partners with unique and complementary strengths to provide an industry solution that addresses the need for flow assurance and market choices for producers, as well as reliable supplies of price-advantaged, natural gas-derived feedstocks to meet the increasing demand of petrochemical operators," said Michael A. Creel, president and chief executive officer of Enterprise's general partner. "For Enterprise, this project is a 'bolt-on' expansion that enhances the value of our integrated midstream network of assets, including the pipelines that will feed TEP, as well as our fractionators, storage facilities and distribution network at Mont Belvieu, which will be fed by the new pipeline."

The joint venture also includes two new NGL gathering systems. The first will connect TEP to natural gas processing plants in the Anadarko/Granite Wash production area located in the Texas Panhandle and Western Oklahoma. The second NGL gathering system will connect the new pipeline to Barnett Shale natural gas processing plants located in Central Texas. Wider access to multiple production areas, in addition to a competitive transportation fee structure, makes this an attractive option for producers and natural gas processors. Enterprise will construct and operate the pipeline, while Enbridge will construct and operate the new gathering systems.