Natural Gas Processing Plants Take Off in North America
A growing number of natural gas processing plant projects are dotting the landscape as gas is extracted from U.S. tight shale formations. Industrial Info's natural gas processing plant database is tracking more than 100 projects for planned, or already underway, natural gas processing projects involving grassroot construction or expansions at existing plants.
While the bulk of these projects are in the Southwest market region, which contains Texas and Oklahoma, the Rocky Mountains contains a strong number of these projects, thanks to a growing number of natural gas plants in New Mexico and Colorado.
2017 was a very strong year for natural gas processing plant kickoffs, with 7.1 bcf/d starting construction associated with just over 7.1 billion in spending. Over 70% of that investment activity took place in the U.S southwest region. This compares with 7.2 Bcf/d and $6 billion of investment planned for 2018.
The year 2018 is expected to have the largest leap in natural gas output historically. There has been around an 8 Bcf/d increase in demand over the last year. There are around 9 Bcf/d of new NGL recovery capacity expected to come online this year associated with 58 new gas processing trains-these are timed to come online to meet the expected demand spike for NGLs. In 2019, there is expected to be a further 5.8 BCF/d and 34 natural gas processing trains due to come online. This brings the total gas processing capacity to in the U.S to be 116 Bcf/d and 914 trains. Pre-2016, there was only 47 Bcf/d and 437 trains, so the market has in effect doubled capacity over the past 10 years alone.
Tall Oak Midstream
Among the projects in the Southwest region is Tall Oak Midstream’s (Edmond, Oklahoma) planned cryogenic natural gas processing plant in Wetumka, Oklahoma. The plant will process 200 million cubic feet per day of gas from the Arkoma Stack Gathering System. Construction is set to kick off in the next few months and be completed by the end of the year. Kahuna Ventures LLC (Westminster, Colorado) is performing engineering, procurement and construction (EPC) on the project, which has an estimated total investment of $100 million.
Underway in Texas is Producers Midstream’s (Dallas, Texas) 60 million-cubic-foot-per-day processing plant in Van Horn. The cryogenic process plant will process natural gas from the Delaware Basin. Construction kicked off in the second half of last year and is expected to be completed soon.
In Colorado, DCP Midstream LLC (NYSE:DCP) (Denver, Colorado) is in the final stages of planning for its 200 million-cubic-foot-per-day Phase II expansion of its O’Connor processing plant in Kersey, Colorado. Saulsbury Industries is providing EPC on the project, which is expected to kick off soon and be completed in the third quarter of this year.
Among other things, the company said it was accelerating the operational date of its $200 million Mewbourn Natural Gas Processing Plant Train #3 Addition in Colorado to August this year. The train will have a compressing capacity of 200 million standard cubic feet per day of natural gas, increasing the total plant capacity to 435 million standard cubic feet per day. Saulsbury Industries (Odessa, Texas) is performing the engineering, procurement and construction (EPC).
However, things may not be looking so rosy for another of the company's planned projects, the Bighorn natural gas processing plant near La Salle, Colorado, which could be affected by Colorado's Proposition 112, which would increase setbacks for oil and gas wells in Colorado to at least 2,500 feet from occupied buildings and vulnerable areas like parks and creeks. This would be up from the current setbacks of 500 feet from homes and 1,000 feet from schools. If passed, the proposition could end up curtailing oil and gas production in Colorado.
Among the other companies with planned NGL plants is ONEOK Incorporated (NYSE:OKE) (Tulsa, Oklahoma). The company plans to add a 125,000-BBL/d NGL fractionation plant to its existing 150,000-BBL/d plant to extract NGL from increased wet natural gas production from the Cana-Woodford Shale in Oklahoma and the Eagle Ford. Construction on the $575 million project is planned to kick off in the second quarter of this year and be completed in early 2020. Burns & McDonnell Incorporated (Kansas City, Missouri) is performing EPC work.
In Oklahoma, ONEOK is underway with the expansion of its Canadian Valley natural gas processing plant. A second processing train will double plant processing capacity to 400 million cubic feet per day of natural gas. Optimized Process Designs LLC (Katy, Texas) is providing EPC work on the project, which has an estimated TIV of $155 million. Spencer said work was on schedule for the project, which has a targeted in-service date in the fourth quarter of this year.
ONEOK remains in the planning stage for its grassroot Demicks Lake natural gas processing plant in North Dakota. The plant will process up to 200 million cubic feet per day of natural gas from the Bakken Shale. Optimized Process Designs is EPC contractor. The project is planned to kick off this summer and be completed in 2019. In a press release, ONEOK said the Demicks Lake project would increase its natural gas processing capacity in the Williston Basin to more than 1.2 billion cubic feet per day.
Currently the top projects planned to kick off in Ohio is the addition of a fifth natural gas processing train at MarkWest's plant in Summerfield, Ohio. The 200 million-cubic-foot-per-day train would bring the plant's total processing capacity to 1 billion cubic feet per day of gas from the Utica Shale. The project will have a capacity of 200 million cubic feet per day.
Elsewhere in Appalachia, MarkWest is in the early stages of constructing a grassroot natural gas processing plant near Washington, Pennsylvania, in the southwest corner of the state. The two-train cryogenic processing plant will process up to 200 million cubic feet per day. The plant will have a Natural Gas Liquids production capacity of 20,000 BBL/d. Construction is expected to be completed by the end of this year.
Not all of MarkWest's projects are destined for Appalachia. In Orla, Texas, the company is underway with construction of a grassroot gas processing plant. The 200 million-cubic-foot-per-day plant will process gas from the Delaware Basin. Construction began in the first half of 2017 and is expected to be completed soon.
Investments continue to shift toward the upstream natural gas production and natural gas midstream from a strong long-term demand building up across chemicals, power generation, natural gas, and LNG export markets.
Williams is expanding gas processing capacity at a facility in Wyoming. When finished in 2019, this expansion will increase processing capacity to 345 million cubic feet per day to serve growing customer demand in the Powder River Basin." The expansion is occurring in two sections.
Among the company's major endeavors is the buildout of its Transco natural gas pipeline system, the largest natural gas pipeline system in the U.S. In October, Williams put into service its Atlantic Sunrise expansion project, which increased Transco's capacity by 1.7 billion cubic feet per day (Bcf/d) to 15.8 Bcf/d. Construction on the project began in summer 2017, with the majority of work in Pennsylvania. For more information, see Industrial Info's project reports on the Central Penn North, Central Penn South and Grugan Loop portions of the pipeline.
Natural gas processing plants account for the highest number of Production-related projects set to kick off in the fourth quarter, five of which are in Texas and are rated by Industrial Info is having an 81% to 99% chance of beginning construction as scheduled.
Each is expected to process about 200 million standard cubic feet per day of gas sourced from the two of the largest and most active regions of the Permian Basin: the Delaware Basin, which lies in the westernmost part of the state, and the Midland Basin, which takes up most of the area south of the Panhandle and north of the U.S.-Mexican border.
In the Delaware Basin, Vaquero Midstream (The Woodlands, Texas) expects to begin construction on the $150 million third processing unit at the Caymus Cryogenic Sour Natural Gas Processing Plant in Coyanosa, which would bring the facility's total processing capacity from the Avalon, Wolfcamp and Bone Spring shale formations to 600 million standard cubic feet per day.
The first two processing units, the second of which began operations over the summer, are anchored by long-term volume and acreage commitments from multiple producers in the Delaware Basin.
MPLX LP is building out its presence in the Delaware Basin with its $125 million Tornado Natural Gas Processing Plant in Mentone, which the company expects to finish in August 2019.
It will connect to the Agua Blanca gas pipeline system, which has 1.1 billion cubic feet per day of long-term commitments and in which MPLX has a 10% equity interest. For more information, see Industrial Info's project report.
The three natural gas processing projects rated by Industrial Info as highly likely to kick off in the Midland Basin are:
• Targa Resources Corporation's (NYSE:TRGP) (Houston, Texas) $150
million Pembrook Natural Gas Processing Plant in Midkiff.
• West Texas Gas Incorporated's (Midland, Texas) $120 million St.
Lawrence Natural Gas Processing Plant in Big Lake.
• Cogent Midstream's (Dallas, Texas) $120 million Big Lake Natural
Gas Processing Plant in Big Lake.
These are just a few of the more than 100 active capital natural gas processing projects being tracked by Industrial Info in the U.S.
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