targaintdeliver

Logistics Assets Segment

This segment uses its platform of integrated assets to receive, fractionate, store, treat, transport, deliver, and export NGLs typically under fee-based arrangements. For NGLs to be used by refineries, petrochemical manufacturers, propane distributors, and other industrial end-users, they must be fractionated into their component products and delivered to various points throughout the U.S. Our logistics assets are generally connected to, and supplied in part by, our gathering and processing assets and are primarily located at Mont Belvieu and Galena Park near Houston, Texas and in Lake Charles, Louisiana. This segment also participates in refined petroleum product and crude oil storage and terminaling.

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Fractionation & Treating
After being extracted in the field, mixed NGLs, sometimes referred to as “Y-grade” or “raw NGL mix,” are typically transported to a centralized facility for fractionation where the mixed NGLs are separated into discrete NGL products: ethane, ethane-propane mix, propane, normal butane, iso-butane and natural gasoline.
 
Our NGL fractionation business is under fee-based arrangements. These fees are subject to adjustment for changes in certain fractionation expenses, including energy costs. The operating results of our NGL fractionation business are dependent upon the volume of mixed NGLs fractionated, the level of fractionation fees charged and product gains/losses from fractionation.
 
We believe that sufficient volumes of mixed NGLs will be available for fractionation in commercially viable quantities for the foreseeable future due to historical increases in NGL production from shale plays and other shale-technology-driven resource plays in areas of the U.S. that include North Texas, South Texas, the Permian Basin, Oklahoma and the Rockies and certain other basins accessed by pipelines to Mont Belvieu, as well as from conventional production of NGLs in areas such as the Permian Basin, Mid-Continent, East Texas, South Louisiana and shelf and deep-water Gulf of Mexico. Hydrocarbon dew point specifications implemented by individual natural gas pipelines and the Policy Statement on Provisions Governing Natural Gas Quality and Interchangeability in Interstate Natural Gas Pipeline Company Tariffs enacted in 2006 by the Federal Energy Regulatory Commission (“FERC”) should result in volumes of mixed NGLs being available for fractionation because natural gas requires processing or conditioning to meet pipeline quality specifications. These requirements establish a base volume of mixed NGLs during periods when it might be otherwise uneconomical to process certain sources of natural gas. Furthermore, significant volumes of mixed NGLs are contractually committed to our NGL fractionation facilities.
 
Although competition for NGL fractionation services is primarily based on the fractionation fee, the ability of an NGL fractionator to obtain mixed NGLs and distribute NGL products is also an important competitive factor. This ability is a function of the existence of storage infrastructure and supply and market connectivity necessary to conduct such operations. We believe that the location, scope and capability of our logistics assets, including our transportation and distribution systems, give us access to both substantial sources of mixed NGLs and a large number of end-use markets. 
 
 
Meeting New, More Stringent Environmental Standards
We also have a natural gasoline hydrotreater at Mont Belvieu, Texas that removes sulfur from natural gasoline, allowing customers to meet new, more stringent environmental standards. The facility has a capacity of 40 MBbl/d and is supported by long-term fee-based contracts that have certain guaranteed volume commitments or provisions for deficiency payments. 
 
The following table details the Logistics and Marketing segment's fractionation and treating facilities as of December 31, 2016 
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FOOTNOTES
 
(1) Actual fractionation capacities may vary due to the Y-grade composition of the gas being processed and does not contemplate ethane rejection.
(2) Lake Charles fractionator was idled during 2016 as raw volumes were directed to Cedar Bayou fractionator.  Lake Charles fractionator will run in a mode of ethane/propane splitting for a local petrochemical customer starting in 2017 but will still be configured to handle raw product.
(3) Gross capacity represents 100% of the volume. Capacity includes 40 MBbl/d of additional butane/gasoline fractionation capacity.
 
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Storage & Terminaling
In general, our NGL storage assets provide warehousing of mixed NGLs, NGL products and petrochemical products in underground wells, which allows for the injection and withdrawal of such products at various times in order to meet supply and demand cycles. Similarly, our terminaling operations provide the inbound/outbound logistics and warehousing of mixed NGLs, NGL products and petrochemical products in above-ground storage tanks. Our NGL underground storage and terminaling facilities serve single markets, such as propane, as well as multiple products and markets. For example, the Mont Belvieu and Galena Park facilities have extensive pipeline connections for mixed NGL supply and delivery of component NGLs. In addition, some of our facilities are connected to marine, rail and truck loading and unloading facilities that provide services and products to our customers. We provide long and short-term storage and terminaling services and throughput capability to third-party customers for a fee.
 
Across the Logistics and Marketing segment, we own or operate a total of 39 storage wells at our facilities with a net storage capacity of approximately 66 MMBbl, the usage of which may be limited by brine handling capacity, which is utilized to displace NGLs from storage.
 
We operate our storage and terminaling facilities to support our key fractionation facilities at Mont Belvieu and Lake Charles for receipt of mixed NGLs and storage of fractionated NGLs to service the petrochemical, refinery, export and heating customers/markets as well as our wholesale domestic terminals that focus on logistics to service the heating market customer base.  
 

 

The following table details the Logistics and Marketing segment's NGL terminaling facilities at December 31, 2016
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FOOTNOTES
 
(1) Five of 12 owned wells leased to Citgo Petroleum Corporation under long-term leases..
(2) Exludes six non-owned wells we operate on behalf of Chevron Phillips Chemical Company LLC ("CPC").  The first of four new permitted wells became operational in June 2015.  The second new well has been drilled and is in the process of being washed.
 
 
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Petroleum Logistics

Our Petroleum Logistics business owns and operates storage and terminaling facilities in Texas, Maryland and Washington. These facilities not only serve the refined petroleum products and crude oil markets, but also include LPGs and biofuels.

 

Baltimore Terminal
Total storage capacity of 505 MBbl.  Currently operates as a fuel oil services terminal and historically, handled asphalt.  The terminal has the ability to expand to handle clean products.  Current modes of transport include: truck, barge and ship.  The terminal is constructing blending capabilities, and adding rail and pipeline accessibility.
                                   
Channelview Terminal
Total storage capacity of 553 MBbl.  Products handled are blendstock, asphalt, marine diesel oil, used motor oil, vacuum gas oil, and crude oil. Capabilities of the terminal include: truck and barge transport, blending and heating. The terminal is expanding to include another 750 MBbl of storage and a deep draft ship dock.
 
Patriot Terminal
Patriot consists of a dock and land for expansion of our Petroleum Logistics capabilities (acquired December 2012).  Patriot is located in Pasadena, Texas and has a deep water ship and barge dock, as well as rail.
 
Sound Terminal
Total storage capacity of 1,457 MBbl.  Products handled are refined petroleum products, LPGs, ethanol, biodiesel, and crude oil.  Capabilities of the terminal include: ship and barge loading, rail and truck transport, blending and heating.  Recently completed an expansion of Targa Sound to connect with the Olympic Pipeline (a products pipeline), add storage capacity, and add ethanol and gasoline blending to the truck loading rack.  For additional information, visit www.targasoundterminal.com.

 

The following table details the Logistics and Marketing Segments's Facilities petroleum logistics facilities at December 31, 2016
 

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