ONEOK, an Oklahoma-based natural gas company, has announced plans to expand its West Texas LPG Limited Partnership (“West Texas LPG”) pipeline system. The West Texas LPG system is a pipeline network that provides natural gas liquids (“NGL”) takeaway capacity for Permian Basin producers. The expansion will supply six third-party natural gas processing facilities located in the Permian Basin. Permian Basin processing facilities produce an estimated 60,000 barrels of output per day, consisting of a variety of natural gas products such as propane, butane, and ethane. Expanding the LPG system is expected to cost $295 million.
The expansion project is predicted to be completed in the first quarter of 2020, and includes a variety of additions to the existing infrastructure. Four new pump stations are being added while two existing pump stations are being upgraded. Further additions include new sections of capacity-enhancing “looped” pipeline (pipeline which runs parallel to existing lines) to the existing West Texas LPG system, expanding transport capacity by 80,000 barrels per day. Finally, the West Texas LPG system will be connected to ONEOK’s Arbuckle II pipeline that is currently being constructed.
In July, ONEOK purchased Martin Midstream Partners LP’s stake in the West Texas LPG pipeline for $195 million thereby acquiring full ownership of the pipeline system. ONEOK purchased their initial 80% interest in West Texas LPG back in 2014. This project constitutes the company’s second expansion upgrade to the system. In total, the existing pipeline network is made up of roughly 2,600 miles of natural gas liquids pipeline in Texas and New Mexico. The system serves the Permian Basin, transporting liquid natural gas from the Basin to processing plants in Mont Belvieu, Texas. The Basin is one of the largest and fastest growing shale fields in the U.S. Natural gas production from the region has risen over thirty percent from the last year to roughly 11.5 billion cubic feet per day.
Because the West Texas LPG project is still in the early stages, the exact route and specific properties to be impacted are not yet known. Landowners with interests in the relevant regions, or who are already familiar with the system’s existing layout, should be on the lookout for any signs of this project’s progress. A request to survey is often the first sign that a piece of property is likely in the path of an upcoming project.
Written by Christopher Chan and Graham Taylor