DCP Midstream LLC Continues with $7 Billion, Multi-Year Capital Expenditure Program

---

Written by Edward Weatherly for Industrial Info Resources (Sugar Land, Texas)--DCP Midstream LLC (Denver, Colorado), a joint venture company owned by Phillips 66 (NYSE:PSX) (Houston, Texas) and Spectra Energy (NYSE:SE) (Houston), is continuing with its $7 billion capital expenditure (capex) program for 2011-15 to expand its presence in natural gas and natural gas liquids (NGL) production. The program focuses on the southern and mid-continental shale formations. Of the total spending plan, just more than $4 billion has been invested.

In 2012, DCP Midstream produced approximately 17% of all U.S.-produced NGL. The company is on track to expand NGL production from its present 400,000 barrels per day (BBL/d) to a projected 500,000 BBL/d. DCP Midstream also intends to expand its natural gas-gathering, processing, logistics and NGL-processing capacity.

The lion's share of the capex dollars will be invested in DCP's Permian, Midcon, South and North areas of operations, which include the shale and tight sands production areas of the Niobrara & Codell in Colorado (North Operations); the Mississippi Lime, Granite Wash and Woodford & Cana plays in Oklahoma and northern Texas (Midcon Operations); and what is going to become a massive gathering, processing and transportation system in the Eagle Ford play (South Operations) and other investments in the Texas Permian Operations.

For gathering and processing, DCP Midstream intends to invest $850 million to $1 billion in the Permian Operations; $500 million to $750 million in its South Operations; $850 million to $1 billion in its North Operations; and up to an additional $1 billion in its Midcon Operations. DCP Midstream will invest the majority of this capital in 10 new plants, several plant expansions, and existing plant restarts.

In the logistics sector, DCP Midstream is placing several NGL pipelines into service, with expansions planned. The Sand Hills & Southern Hills NGL pipelines are close to being fully in-service, with initial flow rates of 350,000 BBL/d that is expandable to 525,000 BBL/d. DCP Midstream also has a 33% ownership interest in the Front Range NGL pipeline, with an initial flow rate of 150,000 BBL/d that is expandable to 230,000 BBL/d and an in-service date targeted for late 2013; and a 10% interest in the Texas Express NGL pipeline, with an initial flow rate of 280,000 BBL/d that is expandable to 400,000 BBL/d and a targeted in-service date of mid-2013.

These pipeline assets are situated to transport produced, mixed NGL's from the gathering and production areas to the NGL fractionation center of Mont Belvieu, Texas. There has been some speculation on how much DCP Midstream will invest in new NGL fractionation facilities and further expand its reach from the wellhead to completed products. Such products include ethane, propane, butane and C4+ chains that form the backbone of the heating industry, petrochemical feedstock, propane dehydration facilities and exports.

Industrial Info is currently tracking the progress of 53 DCP Midstream projects with a capex value of more than $2.83 billion that is spread across Colorado, Texas, Oklahoma, New Mexico and Kansas. The projects covered are in the Oil & Gas Terminals, Transmission and Production industries, and include the capex projects and the processing facilities' in-plant maintenance programs, which temporarily bring these plants offline.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.