Midstream companies are focused on natural gas liquid (NGL) growth opportunities.
ONEOK (OKE) and MPLX LP (MPLX) are the latest names to tap growth opportunities around NGLs. The midstream companies will team up to construct a new large-scale liquefied petroleum gas (LPG) export terminal in Texas City, Texas. Additionally, ONEOK and MPLX will build a new pipeline from ONEOK’s Mont Belvieu, Texas, storage facility to the new terminal.
The capacity of the new export terminal will be 400,000 barrels per day (bpd). The loading throughput is expected to be primarily low ethane propane (LEP) and normal butane (NC4). ONEOK and MPLX will each contractually reserve 200,000 bpd for their respective customers, according to a statement.
See more: Midstream Investing in NGLs Amid Record Exports
The production of NGLs in the U.S. has grown alongside increasing oil and natural gas production. Advances in shale gas extraction have boosted NGL production in the U.S.
NGLs are separated from the natural gas stream at gas processing facilities, before being further processed into purity products through fractionation. Fractionation plants process NGLs into individual components such as propane, butane, ethane, isobutane, and natural gasoline. LPGs include propane, butane, and isobutane.
See more: Propane Helps Fuel Midstream/MLP Growth
Propane and butane are relatively familiar NGLs due to their use in consumer cooking applications. However, growing global demand for plastics is also driving the need for more propane.
Butane has a number of applications but is primarily blended into gasoline.
Details on ONEOK and MPLX’s NGL Export Facility and Pipeline
The export terminal joint venture, named Texas City Logistics LLC (TCX), is owned 50% by ONEOK and 50% by MPLX, according to the statement. Furthermore, MPLX is constructing and operating the facility, with the project expected to be completed in early 2028.
The pipeline joint venture, MBTC Pipeline LLC, is owned 80% by ONEOK and 20% by MPLX. ONEOK is constructing and operating the pipeline.
ONEOK’s and MPLX’s share of the total investment in the export terminal is expected to be approximately $700 million each, totaling $1.4 billion. Additionally, ONEOK’s and MPLX’s share of the total investment in the pipeline are expected to be approximately $280 million and $70 million, respectively, for a total of $350 million, according to the statement.
Investors can get exposure to ONEOK and MPLX, as well as other midstream companies, with the Alerian Energy Infrastructure ETF (ENFR ).
ENFR tracks the Alerian Midstream Energy Select Index (AMEI). The index is a composite of North American energy infrastructure companies, which includes MLPs and C-corps. AMEI is yielding 5.2% as of February 4.
For more news, information, and analysis, visit the Energy Infrastructure Channel.
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