Logistics & Transportation Segment
Our Logistics and Transportation segment is also referred to as our Downstream Business. Our Downstream Business includes the activities and assets necessary to transport and convert mixed NGLs into NGL products and also includes other assets and value-added services described below. The Logistics and Transportation segment includes Grand Prix, as well as our equity interest in GCX. The associated assets, including these pipelines, are generally connected to and supplied in part by our Gathering and Processing segment and, except for the pipelines and smaller terminals, are located predominantly in Mont Belvieu and Galena Park, Texas, and in Lake Charles, Louisiana. Our fractionation, pipeline transportation, storage and terminaling businesses include approximately 2,100 miles of company-owned pipelines to transport mixed NGLs and specification products.
The Logistics and Transportation segment also transports, distributes, purchases and sells and markets NGLs via terminals and transportation assets across the U.S. We own or market products at terminal facilities in a number of states, including Alabama, Arizona, California, Florida, Kentucky, Louisiana, Mississippi, New Jersey, Tennessee and Texas. The geographic diversity of our assets provides direct access to many NGL customers as well as markets via trucks, barges, ships, rail cars and open-access regulated NGL pipelines owned by third parties.
NGL Transportation & Services
Our Grand Prix NGL Pipeline connects our gathering and processing positions throughout the Permian Basin, North Texas, and Southern Oklahoma (as well as third-party positions) to our fractionation and storage complex in the NGL market hub at Mont Belvieu, Texas. Grand Prix transports NGLs from the Permian Basin on a 24-inch diameter pipeline with a capacity of 410 MMBbl/d, expandable to 550 MMBbl/d, and from North Texas and Southern Oklahoma via pipeline of varying capacity, which both connect to a 30-inch diameter segment into Mont Belvieu. The final segment has a 450 MMBbl/d capacity, which is expandable to 950 MMBbl/d.
Additionally, through our 50% ownership interest in Cayenne Pipeline, LLC, we operate the Cayenne pipeline, which transports mixed NGLs from VESCO in Venice, Louisiana, to an interconnection with a third-party NGL pipeline in Toca, Louisiana.
After being extracted in the field, mixed NGLs 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.
Contracts for our NGL fractionation services are 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.
At Mont Belvieu operated facility, we have eight fractionation trains, representing a gross capacity of 813.0 MBbl/d, including: (1) five fractionation trains with an aggregate capacity of 493.0 MBbl/d that are part of our 88%-owned Cedar Bayou Fractionators, (2) Train 6, a 100 MBbl/d fractionation train (“Train 6”), a joint venture between Targa and Stonepeak Infrastructure Partners (“Stonepeak”), in which Targa owns a 20% interest, (3) Train 7, a 110 MBbl/d fractionation train, a joint venture between Targa and Williams which began operations in the first quarter 2020, in which Targa owns an 80% equity interest, and (4) Train 8, a 110 MBbl/d fractionation train, which began operations late in the third quarter 2020 and is wholly-owned by Targa. Certain fractionation-related infrastructure for Train 6 and Train 7, such as storage caverns and brine handling, were funded and are owned 100% by Targa. Our fractionation trains are 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.
We additionally have a wholly-owned and operated fractionation facility in Lake Charles, Louisiana, representing a gross capacity of 55.0 MBbl/d.
In addition to our operated facilities, we hold an equity investment in, Gulf Coast Fractionators LP (“GCF”), also located at Mont Belvieu. In January 2021, the GCF facility was temporarily idled, but is available for reactivation, subject to prevailing market conditions and agreement with our partners. We are assuming operatorship of GCF in the first half of 2021.
NGL Storage and 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, including Grand Prix. 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 Transportation segment, we own 34 storage wells at our facilities with a gross NGL storage capacity of approximately 75 MMBbl, and operate 7 non-owned wells, the usage of which may be limited by brine handling capacity, which is utilized to displace NGLs from storage.
LPG Exports & Services
Our international export assets include our facilities at both Mont Belvieu and the Galena Park Marine Terminal near Houston, Texas, which have the capability to load propane, butanes and international grade low ethane propane The facilities have an effective export capacity of up to 15 MMBbl per month, but given the mix of propane and butane demand, vessel size and availability of supply, and a variety of other factors, our effective working capacity is estimated to be approximately 12.5 MMBbl per month. 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 are in the process of enhancing our loading capabilities.
Marketing & Other
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 Transportation segment, including exports. During the year ended December 31, 2020, our distribution and marketing services business sold an average of 752.5 MBbl/d of NGLs.
We generally 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 Transportation 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.
Our other businesses are as follows:
- NGL Distribution and Marketing
- Wholesale Domestic Marketing
- Refinery Services
- Commercial Transportation