Targa Resources Ups 2018 Capex to $1.6 Billion as Demand Grows on Gulf Coast

Researched by Industrial Info Resources (Sugar Land, Texas)--Targa Resources Corporation (NYSE:TGRP) (Houston, Texas) plans to spend more in 2018 on growth-related capital projects, in response to growing demand for natural gas and natural gas liquids (NGL)--particularly along the U.S. Gulf Coast, where the company expects to add substantially to its capacity. Industrial Info is tracking $2.44 billion in active projects involving Targa, almost all of which are set to begin or finish construction this year.

Targa expects 2018's growth-related capital expenditures to total about $1.6 billion, although it anticipates other projects will be identified throughout the year, adding to the total. Maintenance-related capital expenditures are expected to be about $120 million. Capital spending in 2017 totaled $1.5 billion, compared with $592 million in 2016.

Targa also estimates 2018's natural gas inlet volumes will average between 3.15 billion and 3.35 billion cubic feet per day, about 18% higher than in 2017; in the Permian Basin alone, inlet volumes are expected to be between 1.55 billion and 1.65 billion cubic feet per day, about 25% higher. Last year's inlet volumes in the Permian increased 19% over 2016. Industrial Info is tracking four cryogenic natural gas processing plants under construction in and around the Permian Basin in Texas, including:

• $130 million Wildcat Natural Gas Processing Plant in Kermit, which would process 250 million standard cubic feet per day; see project report
• $100 million Johnson Natural Gas Processing Plant in Midland, which would process 200 million standard cubic feet per day; see project report
• $80 million Joyce Natural Gas Processing Plant in Midkiff, which would process 200 million standard cubic feet per day; see project report
• $50 million Oahu Natural Gas Processing Plant in Pecos, which would process 60 million standard cubic feet per day; see project report

"[In] the Permian, we continue to execute on our growth program and remain on track to add incremental 710 million cubic feet per day of new processing capacity in 2018," said Matt Meloy, the president of Targa, in a recent earnings-related conference call. "We expect to begin operations on our 60 million-cubic-foot-per-day Oahu plant later this month, and construction continues on our 250 million-cubic-foot-per-day Wildcat plant, which is expected to begin operations in the second quarter of 2018. These plants are interconnected with multiple other plants and systems across the Delaware and Central Basin."

Further south in Texas, Targa and Sanchez Midstream Partners LP's (Houston) joint-venture Carnero gathering system benefited from higher volumes. The two companies are eyeing a $60 million expansion at the Raptor plant in Artesia Wells, Texas, which processed the gas used in Carnero. The expansion, as currently envisioned, would add 60 million standard cubic feet per day of capacity, bringing the Raptor plant's total capacity to 260 million standard cubic feet per day by the end of the third quarter. For more information, see Industrial Info's project report.

Targa's most widely anticipated capital projects include two major pipelines in southern Texas. In December, Targa announced a positive final investment decision with Kinder Morgan Incorporated (NYSE:KMI) (Houston, Texas) and DCP Midstream LP (NYSE:DCP) (Denver, Colorado) on the construction of the $1.7 billion Gulf Coast Express natural gas pipeline, which would carry 1.98 billion cubic feet per day of natural gas from Waha Hub near Coyanosa to Agua Dulce, via four spreads:

• $300 million Spread 1, running 80 miles from the Waha Hub near Coyanosa to Rankin; see project report
• $650 million Spread 2, running 180 miles from Rankin to Del Rio; see project report
• $450 million Spread 3 and 4, running 103 miles from Del Rio to Agua Dulce; see project report

For more information, see December 22, 2017, article - Final Investment Decision Made on Gulf Coast Express Natural Gas Pipeline.

Targa also is nearing construction on its $1.3 billion Grand Prix NGL pipeline, which will carry 300,000 barrels per day of Y-grade NGL about 600 miles from the Permian to the company's fractionation and storage facility in Mont Belvieu, Texas. Executives also announced in the earnings call that Targa will move forward on the $475 million Train 6 at the Mont Belvieu complex. Both projects are in response to increased tightness in the Gulf Coast fractionation market, with demand for long-term contracts increasing. Train 6 will produce 100,000 BBL/d of high-purity butane, propane, ethane and other liquids, sourcing the feedstock from the Marcellus Shale. For more information, see Industrial Info's project reports on Grand Prix and Train 6.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, 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. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.