targaintdeliver

Logistics & Marketing Segment

Our Logistics and Marketing segment is also referred to as our Downstream segment. Our Downstream infrastructure is generally connected to, integrated with and supplied in part by our Gathering and Processing segment and, is located predominantly in Mont Belvieu and Galena Park, Texas.  Our pipeline transportation, fractionation, storage and terminaling infrastructure includes approximately 1,100 miles of company-owned pipelines to transport mixed NGLs and specification products.

 

Additional information related to our Downstream infrastructure and business activities are provided below.

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NGL Transportation & Services
After being extracted in the field from Targa and third party natural gas gathering and processing facilities, mixed NGLs are transported on our Grand Prix NGL pipeline to our fractionation complex in Mont Belvieu where the mixed NGLs are separated into discrete NGL products: ethane, ethane-propane mix, propane, normal butane, isobutane and natural gasoline. These specification products are then supplied to key demand markets along the US gulf coast, including petrochemical facilities, refineries, end-use markets and exported to international LPG markets.
 
Our NGL Transportation & Services business is underpinned by fee-based arrangements, which are subject to adjustment for changes in certain transportation and fractionation expenses, including energy costs. The operating results of our NGL Transportation & Services business are dependent upon the volume of mixed NGLs transported, fractionated, the level of transportation and fractionation fees charged and product gains/losses from fractionation.
 
We believe that sufficient volumes of mixed NGLs will be available for transportation and 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 Texas, New Mexico, 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 transportation and 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 pipeline and fractionation facilities.
 
The ability of an NGL transporter and fractionator to obtain mixed NGLs and distribute NGL products is 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 many end-use markets.
 
The NGL Transportation & Services business includes our common carrier NGL pipeline, Grand Prix, which transports NGLs from the Permian Basin, southern Oklahoma and North Texas to our fractionation and storage complex in the NGL market hub at Mont Belvieu, Texas. The capacity of the 24-inch diameter pipeline segment from the Permian Basin is approximately 300 MBbl/d, expandable to 550 MBbl/d. The pipeline segment from the Permian Basin is connected to a 30-inch diameter pipeline segment in North Texas where Permian, North Texas and Oklahoma volumes are connected to Mont Belvieu, and have capacity of approximately 450 MBbl/d, expandable to 950 MBbl/d. The capacity from Oklahoma to North Texas varies based on telescoping pipe size. Grand Prix is supported by our gathering and processing volumes and other third-party customer volume commitments.
 
Our fractionation assets include ownership interests in three stand-alone fractionation facilities that are located on the Gulf Coast, two of which we operate, one at Mont Belvieu, Texas and the other at Lake Charles, Louisiana. We have an equity investment in the third fractionation facility, Gulf Coast Fractionators LP (“GCF”), also located at Mont Belvieu. In addition to the three stand-alone facilities in the NGL Transportation & Services business, we own fractionation assets at Chico, Monument and Gillis in our Gathering and Processing business.
 
Five of our existing six fractionation trains at the Mont Belvieu facility are part of our 88%-owned Cedar Bayou Fractionators (CBF), which has 493.0 MBbl/d of gross capacity. Our sixth fractionation train, Train 6, which is not affiliated with CBF, is also located at our Mont Belvieu facility and has 100 MBbl/d gross capacity. Two additional fractionation trains, which are currently under construction at the Mont Belvieu facility and are also not part of CBF. The additional fractionation trains will be fully integrated with our existing Gulf Coast NGL storage, terminaling and delivery infrastructure, which includes an extensive network of connections to key petrochemical and industrial customers as well as our LPG export terminal at Galena Park on the Houston Ship Channel. The additional fractionation trains are: (1) the 110 MBbl/d Train 7, which is expected to begin operations late first quarter 2020 and (2) the 110 MBbl/d Train 8, which is expected to begin operations late third quarter 2020.

 

We also have a natural gasoline hydrotreater at Mont Belvieu, Texas that removes sulfur from natural gasoline, allowing customers to meet stringent environmental standards. The facility has a capacity of 35 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, 2018

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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 the ethane rejection.
(2) Lake Charles Fractionator runs in a mode of ethane/propane splitting for a local petrochemical customer and is configured to handle raw product.
(3) Gross capacity represents 100% of the volume. Capacity includes 10 MBbl/d of additional back-end butane/gasoline fractionation capacity.
(4) The benzene saturation unity of the LSNG Hydrotreater was idled in 2018.
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LPG Exports & Services

Our international export assets include our facilities at both Mont Belvieu and the Galena Park Marine Terminal near Houston, Texas. The facilities have export capacity of approximately 7 MMBbl per month of propane and/or butane with the capability to export international grade low ethane propane. We have the capability to load VLGC vessels, alongside small and medium sized export vessels. We continue to experience demand growth for U.S.-based NGLs (both propane and butane) for export into international markets and have the ability to further enhance our loading capabilities. We are currently expanding our export capabilities at our Galena Park terminal, which will increase our effective LPG export capacity to 11 to 15 MMBbl per month in the third quarter of 2020.

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Storage, Terminaling, Marketing & Other

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.  Additionally, 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 our Downstream business, we own 34 storage wells at our facilities with a gross storage capacity of approximately 71 MMBbl, and operate 6 non-owned wells, the usage of which may be limited by brine handling capacity, which is utilized to displace NGLs from storage.
Furthermore, we market our own NGL production and also purchase component NGL products from other NGL producers and marketers for resale. Additionally, we also purchase product for resale in our Logistics and Marketing segment, including exports. During the year ended December 31, 2018, our distribution and marketing services business sold an average of 537.9 MBbl/d of NGLs.
Generally, we purchase mixed NGLs at a monthly pricing index less applicable fractionation, transportation and marketing fees and resell these component products to petrochemical manufacturers, refineries and other marketing and retail companies. This is primarily a physical settlement business in which we earn margins from purchasing and selling NGL products from customers under contract. We also earn margins by purchasing and reselling NGL products in the spot and forward physical markets. To effectively serve our distribution and marketing customers, we contract for and use many of the assets included in our Logistics and Marketing segment.
We also market natural gas available to us from the Gathering and Processing segment, purchase and resell natural gas in selected U.S. markets and manage the scheduling and logistics for these activities.

 

The following table details the Logistics and Marketing segment's NGL storage and terminaling facilities at December 31, 2018

opsfield-nlgstoragechart

FOOTNOTES

(1) Volumes reflect total import and export across the dock/terminal and may include volumes that have also been handled at the Mont Belvieu Terminal.
(2) Excludes six non-owned wells we operate on behalf of Chevron Phillips Chemical Company LLC ("CPC") and one additional non-owned well that is being prepared for operations. One additional well has been drilled and is being prepared for operations. One additional well is permitted.
(3) Five of 12 owned wells leased to Citgo Petroleum Corporation under long-term leases.

 

The following table details the Wholesale Marketing Terminal facilities as of December 31, 2018

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FOOTNOTES
(1) Throughputs include volumes related to exchange agreements and third-party storage agreements.
(2) Volumes reflect total transport and injection volumes.
(3) Throughput volume reflects 100% of the facility capacity
(4) Rail-to-truck transload equipment.

 

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