DCP Midstream Developing Heavily in Texas and Natural Gas Liquids

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Researched by Industrial Info Resources (Sugar Land, Texas)--DCP Midstream LLC (DCP), an equally owned joint venture between Spectra Energy Corporation (NYSE:SE) (Houston, Texas) and ConocoPhillips (NYSE:COP) (Houston), is the largest natural gas liquids (NGL) producer in the U.S, and one of the largest natural gas gatherers and processors, as well. With natural gas prices continuing to sit below the profitability mark for many producers, DCP is forging ahead with development of gathering and processing resources, particularly in Texas.

In January of 2011, DCP had an excess of 250 million cubic feet per day (MMCFD) of processing capacity in the Eagle Ford Shale, which stretches through the southern and eastern parts of Texas. At that time, DCP announced plans for one of several new processing plants throughout Texas, the Eagle gas plant. The Eagle gas plant, one of two in the Eagle Ford Shale, is currently under construction and is expected to be completed in the third quarter of this year. The plant will be built outside the town of Edna and will add another 200 MMCFD of processing capacity to DCP's already considerable assets.

In addition to the Eagle gas plant, DCP is investing $190 million in three other new processing plants in Texas. Together, the four plants are estimated to add another 500 MMCFD of processing capacity, and to cost roughly $270 million, according to Industrial Info. These plants are in various stages of development, from the Eagle gas plant which is nearing completion this year, to the Pecos plant in west Texas, which has just completed its pre-FEED study. In addition to the new plants, DCP is also investing roughly $16 million in expansions and additions to its existing facilities throughout the state, part of roughly $34.5 million invested in such projects nationwide that are being tracked by Industrial Info.

DCP is not only investing in its processing and fractionation capacities, but also its transmission infrastructure. Industrial Info is currently tracking more than $1.9 billion in pipeline and terminal projects being undertaken by DCP. The vast majority of these are related to the transportation of NGL, of which $1.4 billion are located in Texas and are set to kick off this year. With natural gas prices hitting such lows, DCP seems to be capitalizing on the NGL market.

In addition to its Texas facilities, DCP is also investing in pipeline and terminal projects throughout New Mexico, Oklahoma, and Kansas. One of the most prominent investments, however, is another processing plant that is nearing construction in the Denver-Julesburg basin. The new plant, dubbed the LaSalle gas plant, will process and fractionate 110 MMCFD of natural gas once completed, further expanding DCP's considerable capacity.

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