Four operators in the oil and gas industry – Anadarko Petroleum Corporation (APC), Enterprise Products Partners L.P. (EPD), DCP Midstream Partners, LP (DPM) and MarkWest Energy Partners, L.P. (MWE) – have entered into a joint venture for Enterprise Product's natural gas liquids (“NGL”) pipeline expansion in eastern Texas.
Per the joint venture agreement, Enterprise Products will allocate 45% ownership interest in its wholly owned subsidiary, Panola Pipeline Company, LLC. This stake will be equally apportioned among Anadarko’s affiliate WGR Asset Holding Company LLC, DCP Midstream and MarkWest Enterprise.
The remaining 55% stake will be held by Enterprise Products, which will continue to serve as the operator of the Panola Pipeline. Originating in Carthage, TX, the Panola Pipeline stretches 181 miles to Mont Belvieu and transports NGL.
Recently, Enterprise Products divulged its expansion plans of installing 60 miles of new pipeline, pumps and other related equipment for increasing its capacity by 50,000 barrels per day (bpd). The project is expected to come online by the first quarter of 2016 (read: Enterprise Products' Panola Pipeline Expansion on Track).
The project has a two-fold benefit of providing additional capacity for the companies’ growing NGL production, especially Anadarko’s well-placed assets in mineral-rich East Texas, as well as helping Enterprise Products grow its midstream presence in Panola County.
Amid the downtrend in natural gas prices, which is expected to continue through the next two years, the U.S. Energy Information Administration’s short-term energy outlook projects NGL production to grow 8.4% to 3.21 million bpd in 2015 and 17.9% to 3.49 million bpd in 2016 from the 2014 levels.
Going by the projection of increasing NGL production in the future, demand for midstream projects is expected to rise.
Anadarko Petroleum currently carries a Zacks Rank #4 (Sell).
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