And a Happy Forth to you,too..and thanks for all the great info you find and post! That said, there are three Qs I have when thinking of Targa: 1. Will Targa follow EPD into ethane exports? Phillips 66 which is going into more easily handled propane exports is declining to build an ethane export facility. 2. Will the DCP Enterprise acquire Targa? I think it a nice fit...and since Spectra Energy and Phillips 66 share the GP that runs DPM,too, there's plenty of bucks available for the acquisition of Targa. And 3. Will Mexico allow the development of the Eagle Ford Shale formation on their side of the Rio Grande by the USA drillers and MLPs like. Antero,Targa,MWE etc? There's no way the eagle Ford shale stops at the Rio Grande...and pipelines to Mt Belvieu and the EPD/Targa complexes there is easy! Thanks again.
When you think about condensate/splitters etc you do have to think about the intended markets,too. When the USA exports condensate if it doesn't end up as diluent for heavy crude it as to be "split" somewhere into jet fuel or diesel fuel etc. And not all countries in South America, for example, can do that. I suspect we will have a bunch of splitters built to handle some of the condensate action as our refining sector is both efficient and politically stable....exporting condensate to Venzuela or Argentina for "splitting" might be challenging,think I. In any case, the "splitter" projects announced so far are relatively small so it's not a really big hit on anyone yet.
The most attractive features of Targa IMO are its' solid number two positions to EPD in both fractionation and export of natural gas liquids from the Mont Belvieu/ Houston TX Ship Channel area. That said, I think the DCP Enterprise 50% owned by Philips 66 and 50% owned by Spectra Energy together having a market cap around $100Billion could join Targa with its' DPM midstream MLP to create a real Hitter. NGLS combined with DPM would be a beautiful fit. Another beautiful fit would be found in Nymarv's thought of EPD picking up MWE. It's obvious that the natural gas liquids area is consolidating...and it's going to be interesting to see how the process plays out. Another interesting possibility is Plains All America, now mostly in crude logistics...however, Plains is involved in natural gas liquids in Canada and might want to expand in the USA in this area. And if the Atlas group breaks up MWE picking up APL would make sense. APL is now concentrated in TX and OK and would be a good complement to MWE there. APL and MWE do have a small JV involving one cryo operation already.
Hi,Nymarv! Seeing your post reminded me t ha t EPD has finally announced the location of its' ethane export terminal..on the Houston Ship Channel with ethane piped from Mont Belvieu..another item you had brought up was condensate and splitters. I was surprised that condensate is regarded as a crude oil legally..and cannot be exported...so, if you want to maximize returns you have to split condensate into exportable components...there will be an excess of very light crude/condensate of almost a million barrels a day by 2018 so it is an opportunity..seeing MMP go into building a 50,000 barrel/day splitter was interesting in that MMP has always been a "passive" MLP involved in pipelines and storage tanks only. But,hey, a 6x EBITDA project makes sense to them, I guess!!
So Williams adds access to its' Cayman and atlas acquisitions..and MWE continues organic growth..kind of reminds me of the way the Miami Heat was built through acquiring James,Wade etc vs San Antonio Spurs long term growth..both win, but Spurs are more stable. That's kind of the way I see it here. MWE will IMO have the more stable growth going forward..
This expansion is really terrific for several reasons: 1. It was obviously planned for in the initial Hopedale construction. A doubling of the fractionation capacity in 3 Qs is amazing...a grassroots unit would take 2 years at least. 2. Market Channels are in place.. The nearby TEPPCO pipeline takes ethane south to Texas as ATEX. The TEPPCO pipeline section going North from Hopedale presumably takes Propane still to New England. This new Hopedale unit will just provide even more propane to keep Buy and Win warm in winter! The smaller volume butanes produced will probably go out via truck and rail with some winding up at the DPM export terminal at Hampton Roads. 3. Natural Gas Liquid volumes in both Marcellus and Utica are ratcheting upward rapidly..and MWE is getting most of the action! And 4. 2015 to 2016 going to be a BIG DCF period for MWE..with the basic infrastruction now in place tying in a new production unit is like pumping cash!
Happy Summer Driving! A purring BMW at the Beach sounds like a winner...I just got back from Japan and riding the rails on the Nozomi at 180mph or so..smooth,quiet, like Your BMW! Anyway, like you I'm looking for the next midstream to keep going. I have been taking profits in both MMP and EPD as distributions from both are kind of low thanks to unit appreciation. However, I am retaining core positions in both because of solid future prospects. My three biggest positions are in order MWE,GEL,and NGLS. All three IMO have further to run in the next three years. I've started putting a few dollars into CMLP thinking that he merger that formed it might have some synergy benefits in the next two years. Another one I'm looking at is NRP, the battered owner of coal properties now moving into oil,natural gas, aggregates etc. I don't want to catch a falling knife, but Team Obama can't kill coal overnight. I agree that MMLP overpaid for the pipeline piece it bought from APL. However, my holding is in APL so I'm pleased. I bought a bunch of APL when it was in the tank and think it,too, has some room to grow before I start downsizing. I like GEL as it builds up in crude handling..the GOM pipelines it has interests in should fill up in the next four or fiver years benefitting us considerably. Were it possible I would buy MMPL for its' marine interests spinning off the combined sulfur action. The integrated crude/refined products action will be terrific as long as Team Obama blocks Keystone. Putting a few more bucks in Targa is to me a good thing,too...the expanded propane export action goes commercial in another Q and Targa is getting reading to build another two fractionation trains at 100,000 barrels/day each. What will be REAL interesting with Targa is if it follows EPD and puts $Billion into an ethane export terminal..that's a big risk/reward sort of thing! I would keep an eye on extensions of Eagle Ford action into Mexico,too! Take care.
Aside from saying that its' ethane export facility will be integrated with its' Mont Belvieu complex EPD has not yet announced exactly where the terminal will be located...I did see the OILT option and assumed that OILT would be the landlord for the new terminal. As to Competition between the teams you cited, let's dispose of DPM first. The only mention I've seen of DPM's intent to export is one saying that DPM will be exporting Butane from its' Hampton Roads facility. Compared to propane and ethane the export of butane is chicken feed. I'm guessing that DPM will be getting butane from MWE and shipping it to Hampton Roads via RR. We know that MWE and KMP are kinda playing tag with Targa. And Targa has indicated it will probably add fractionation units numbers 5 and 6 at Mont Belvieu..at 100,000 barrels/day each. This fits the Y pipeline volumes being talked about by KMP/MWE. Targa also being talked about as being interested in the 80% share of NM/TX ngl pipeline owned by Chevron. Other 20% just sold to MMLP'S by APL. D/ACMP is small potatoes in export action. In summary, EPD/OILT is Número UNO, Targa/KMP/MWE number two, and ETE/ETP/SXL a distant third. Also, when you are loading a really bing ethane carrier at a 240,000 barrel/day rate the economics beat hell out of using small ships and loading rates like SXL will use at Marcus Hook. I also note that there are 16 crackers on the Gulf Coast that will be using ethane versus only one up North in Sarnia..ethane market on Gulf Coast is a monster, and higher volumes equal lower costs for export customers. Propane is the same way..in a couple of months EPD and Targa will be exporting around 200 million barrels/year of propane and no one is third. And in another year EPD's big PDH plant based on propane comes on line.. In this area it's EPD and Targa all the way.
The EPD discussion at NAPTP of its'ethane export project revealed a BIG competitive problem for the Mariner East ethane action to be exported from Marcus Hook just south of Philadelphia. EPD announced among other items that it now has an ethane contract with Ineos for ethane exported from Texas to the Ineos Plant in Grangemouth,Scotland. EPD also announced that its' ethane export terminal now under construction will have a capacity of 240,000 barrels a day and will go commercial in 2016. This is about the same time that the Grangemouth conversion from naptha to ethane will be completed. What's remarkable here is 1) the initial size of the EPD ethane export terminal and 2) that EPD will be exporting to Europe. EPD generally exports natural gas liquids to South America and with the expanded Panama Canal was expected to ramp up to Asia big time. But with Europe in play using very large carriers from the Houston Ship Channel means big pressure on Mariner East and SXL. Targa, another BIG Hitter in propane exports, indicated that it is studying the large scale export of ethane from its' Texas terminals,too. Having both EPD and Targa involved in ethane exports means IMO that Mariner East 2 better be built ,filled, and working quickly or it will be irrelevant.
Kind of neat that Sasol of South Africa is spending like $20Billion on a natural gas to liquids plant near Lake Charles,LA...close to the waterways where GEL Marine operates...by 2018 Sasol should be pumping out 100,000+ barrels/day of diesel, jet fuel, etc much of which will be transported by barge somewhere...LA is investing $2Billion in tax incentives,infrastructure etc...1200+ permanent jobs...
The decision as to whether the Y pipeline goes through is to me pretty simple: if Antero wants it good things will happen. Within the next year, Antero will represent 30+% of the MWE Marcellus/Utica action..and you think MWE will commit without Antero? Antero can base load the Y line easily....
Hi,Dreiser! Always fun to speculate with you...assuming this isn't just a normal shelf registration that all MLPs do then I have two possibilities to offer up. 1. Another chunk of barges etc like Hornbeck..GEL seems to be making a bunch of bucks with the GEL Navy so making another acquisition seems like a good move. There aren't too many Barge Navies bigger than GEL's these days. 2. A big expansion of GEL's Wyoming refinery. Right now GEL has a pipeline from that refinery to Casper for refined products..and GEL also has an open season for a pipeline bringing crude oil from Casper to the Pronghorn RR loading facility near the refinery . Now, it seems to me that bringing crude into both the refinery and Proghorn from Casper would be easy..and if demand for refined products is growing in Wyoming then why not double or triple the size of the Gel refinery? There's kind of a third possibility..the acquisition of Martin Midstream. Martin has a good size barge navy, is big in recovering sulfur like GEL, and just plunked down $135million to buy from APL its'20% share of the big Chevron operated natural gas liquids pipeline in NM and TX...It seems like a reasonable fit, but would take a lot more than $400million... Hey,fun..GEL has done very well for us so far!
My response to this one is that Ineos indicated in one article
that it was looking to China to get some ethane ships built. And having been to China for business numerous times I have no doubt that if the Chinese shipyards get rolling there will not be a ship supply problem. In shipbuilding the problem is always the first ship. After that, it's crank 'em out. You simply can't apply western timetables or work practices to China or Korea. My all time favorite project was the ring highway around Shanghai...watching that project unfold was amazing. You think legal challenges,eminent domain issues, strikes stopped that system being built for more than a few minutes? Let's laugh. The Chinese bullet train system is being built at the same blistering pace. Building ethane ships in western shipyards would IMO be govt subsidized deals to provided employment.
What's reality is that with the EPD export terminal having an initial capacity of 240,000 barrels/day of ethane any European cracker using naptha as a feedstock is either dead or dependent on govt subsidies to survive.A cracker takes like 50,000 barrels/day of ethane. Now, what we need to know is just how much ethane is going to go on Mariner East 1 and Mariner East II. Mariner East I has been touted as 70,000 barrels/day of either propane or ethane. It will start with the more valuable propane later this year until the refrigeration facilities required for ethane are available. At Marcus Hook. But let's say that next year the split between ethane and propane is 50/50 or 35,000 barrels/day of ethane. I have yet to see a capacity figure on Mariner East II or whether it will be built...but I am assuming it will be built and that it will be a 12" pipe instead of the 8" pipe in service now. If so, the capacity of Mariner East II would be like 160,000 barrels/day. Assuming that all Mariner East II is ethane we will in late 2016 have 435,000 barrels/day of ethane export capacity available from the USA. This is like 8 crackers worth somewhere. I think it really understandable that Ineos is getting lots of ethane carriers built..with crackers in Norway and Grangemouth,Scotland, Ineos will be in great shape compared to it's competitors. And you have to give EPD a lot of credit. It pioneered propane exports and here it goes again with a massive ethane export project.
Hi,Nymarv! Our buddies OILT have signed a very long term contract with EPD to set up the monster export facilities that will handle the action..it's incredible how fast/big this is happening....shell's cracker is just a minnow in this fast developing market opportunity. I put some more bucks into EPD when CEO Duncan went into propane exports..a remarkable,far sighted decision that got EPD really rolling. Then Targa sucked it up and started building export docks at Galena Park..between EPD and Targa the USA will be able to export over 20 million barrels/month of NGL action soon with much more to come...
With EPD announcing a 240,000b/d ethane export facility on the Gulf Coast going commercial in q3 , 2016 the ethane market will showed a big time improvement for producers and MWE then. Even now, ATEX is taking 30,000 b/d of ethane from the Marcellus/Utica to Mont Belvieu. Add in the 24,000 d/d of ethane going out on Mariner West to Sarnia and we have 50,000+ b/d of ethane being taken. During the EPD CC, mgmt indicated that ATEX would double soon as two more crackers are hooked in. NOVA will be taking 50,000 b/d of ethane in another Q or two. So, by the end of 2014 we should see 100,000+ b/d of ethane moving out of the Marcellus/Utica. In 2015, Mariner East kicks in, and ATEX will certainly add another 50,000 b/d of ethane takeaway. By 2017, only 3 years from now, the EPD export facility kicks in and some 16 Gulf Coast crackers will be on ethane totaling a million b/d of ethane. And who knows, She'll might actually get a cracker running in PA using an incremental 50,000 b/d takeaway by 2019. In any case, EPD has just taken care of the ethane surplus for everyone.
What's really interesting about this analysis is that the predicted 150-200,000 barrels/day of ethane exports 5-6 years out going to 4 or 5 crackers implies that 1. The only foreign crackers will be two NOVA crackers in Canada and two INEOS crackers in Europe and 2. The bulk of ethane exports will be going out of Marcus Hook. One Canadian cracker is in Alberta getting ethane from the Bakken..So, with 50,000 b/d of ethane exported through Marnner West to NOVA in Sarnia and let's say 100,000 barrels/day going to Norway and Scotland via Mariner East I and II this analysis is predicting zero exports from the Gulf Coast 5-6 years out. Somehow, I doubt that. I'm guessing that either EPD,the DCP Enterprise,or Targa will find someone to export to. With ethane kind of a waste product here and global naptha still holding tough, there is going to be some conversion somewhere. Don't get me wrong...if Marcus Hook is the only seaport export source of ethane MWE will do well...however, we IMO won't luck out like that.