Reports related to this article:
Project(s): View 13 related projects in PECWeb
Plant(s): View 12 related plants in PECWeb
Released March 28, 2013 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--As Oil & Gas Producers, Processors and Transporters develop the Niobrara Formation, they are trying to learn from the--and prevent another--Bakken Formation, where production rapidly and dramatically outstripped infrastructure capacity, creating large logistical bottlenecks and imposing costly price penalties on producers of oil, natural gas and natural gas liquids (NGLs).
Unlike the Bakken, "there's no shortage of materials in the Niobrara," said Brian Peterson, project manager for the Wattenberg/Denver-Julesburg Basin for Anadarko Petroleum Corporation (NYSE:APC) (Houston, Texas). "Sometimes the biggest bottleneck is getting the production company to pull the trigger."
Peterson was speaking to about 150 attendees at the Third Annual Niobrara Infrastructure Development Summit, sponsored by Information Forecast Incorporated (Infocast) (Woodland Hills, California). The conference was held March 18-20 in Denver, Colorado.
"Of course, the permits take a lot longer than expected," continued Peterson, who focuses on Anadarko's midstream business in the Denver-Julesburg Basin, which includes the Niobrara Formation. "As we saw in the Bakken, production can outstrip infrastructure very quickly. In the Niobrara, the industry is trying to pace development to match midstream and transportation capacity."
In fact, the pace of midstream and transportation capacity is booming in Colorado: Industrial Info's North American Industrial Project Database lists 43 active Oil & Gas infrastructure projects valued at about $2 billion. These projects include crude-oil transportation, gas and NGL processing, and natural gas transportation and railroad crude-oil loading terminals.
One of the largest midstream companies operating in Colorado is DCP Midstream LLC (Denver, Colorado), a 50:50 joint venture between Phillips 66 (NYSE:PSX) (Houston, Texas) and Spectra Energy Corporation (NYSE:SE) (Houston, Texas). DCP Midstream is a large NGL producer, as well as a processor and transporter of natural gas and NGLs.
Tim Christensen, DCP Midstream's managing director for the Rockies, told conference attendees that his company plans to invest more than $1 billion during the 2011-15 period to build or expand natural gas and NGL processing facilities in the Niobrara Formation. Some of DCP's major Niobrara-related projects include:
Most notably, local air quality restrictions on emissions of nitrogen oxides (NOx) have forced DCP to build an electric infrastructure to take electricity from a local utility. They can't power their operations using an onsite gas-power generator because of these restrictions. "NOx is the biggest regulatory hurdle we face," Christensen said.
One of the reasons that infrastructure in the Niobrara is having trouble catching up with production is that producers are experimenting with drilling multiple wells on the same drilling pad, the DCP executive said.
"We're blessed, no doubt about it," Christensen said of operating in the Niobrara Formation. "But producers are waiting on infrastructure providers, and that's not a good thing. Infrastructure companies have to join hands with producers to get the job done."
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.
Unlike the Bakken, "there's no shortage of materials in the Niobrara," said Brian Peterson, project manager for the Wattenberg/Denver-Julesburg Basin for Anadarko Petroleum Corporation (NYSE:APC) (Houston, Texas). "Sometimes the biggest bottleneck is getting the production company to pull the trigger."
Peterson was speaking to about 150 attendees at the Third Annual Niobrara Infrastructure Development Summit, sponsored by Information Forecast Incorporated (Infocast) (Woodland Hills, California). The conference was held March 18-20 in Denver, Colorado.
"Of course, the permits take a lot longer than expected," continued Peterson, who focuses on Anadarko's midstream business in the Denver-Julesburg Basin, which includes the Niobrara Formation. "As we saw in the Bakken, production can outstrip infrastructure very quickly. In the Niobrara, the industry is trying to pace development to match midstream and transportation capacity."
In fact, the pace of midstream and transportation capacity is booming in Colorado: Industrial Info's North American Industrial Project Database lists 43 active Oil & Gas infrastructure projects valued at about $2 billion. These projects include crude-oil transportation, gas and NGL processing, and natural gas transportation and railroad crude-oil loading terminals.One of the largest midstream companies operating in Colorado is DCP Midstream LLC (Denver, Colorado), a 50:50 joint venture between Phillips 66 (NYSE:PSX) (Houston, Texas) and Spectra Energy Corporation (NYSE:SE) (Houston, Texas). DCP Midstream is a large NGL producer, as well as a processor and transporter of natural gas and NGLs.
Tim Christensen, DCP Midstream's managing director for the Rockies, told conference attendees that his company plans to invest more than $1 billion during the 2011-15 period to build or expand natural gas and NGL processing facilities in the Niobrara Formation. Some of DCP's major Niobrara-related projects include:
- Mewborne 2, which came online in 2011. DCP invested $160 million in this plant, which can process up to 160 million cubic feet of natural gas per day (MMcf/d)
- LaSalle, scheduled to come online this year, can process up to 160 MMcf/d of gas
- Lucerne 2, scheduled to come online next year, will be able to process up to 200 MMcf/d of gas
- Platteville 2, scheduled to begin operating in 2015, also will be able to process up to 200 MMcf/d of gas
- The Texas Express Grassroot NGL Pipeline, which has a total investment value (TIV) of $850 million, is a 580-mile pipeline that will run from Skellytown, Texas, to Mont Belvieu, Texas. It will be able to transport up to 280,000 barrels per day (BBL/d) when it begins operating during the second quarter. That pipeline could be expanded to transport up to 400,000 BBL/d if there was enough market demand.
- The Walsenberg Front Range Grassroot NGL Pipeline is a 435-mile project capable of transporting up to 150,000 barrels of NGLs per day. The project, scheduled to come online near the end of 2013, will originate in Weld County, Colorado, and terminate in Skellytown, Texas, where it will connect with the Texas Express NGL pipeline. The Front Range project has a TIV of $390 million.
Most notably, local air quality restrictions on emissions of nitrogen oxides (NOx) have forced DCP to build an electric infrastructure to take electricity from a local utility. They can't power their operations using an onsite gas-power generator because of these restrictions. "NOx is the biggest regulatory hurdle we face," Christensen said.
One of the reasons that infrastructure in the Niobrara is having trouble catching up with production is that producers are experimenting with drilling multiple wells on the same drilling pad, the DCP executive said.
"We're blessed, no doubt about it," Christensen said of operating in the Niobrara Formation. "But producers are waiting on infrastructure providers, and that's not a good thing. Infrastructure companies have to join hands with producers to get the job done."
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.
