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

opsfield-fractionationchart

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.