No one doubts that 2015 was a tough one for the midstream. Commodity prices dropped through the year, creating challenges for upstream customers and midstream operators working on percent-of-proceeds and netback agreements. Capital projects planned during the shale boom in some cases entered service with lower-than-projected throughputs.
Most companies soldiered on and did their best to prepare for a return to a more normal market in 2016 and beyond. New projects forged ahead, and new demand centers at the downstream end of the midstream chain required commitments as the energy business continued to change. And a few excelled, even in a very tight market.
This year, Midstream Business announced its first awards competition to recognize those companies, deals, projects and executives that excelled in North America’s midstream in 2015. With pleasure, we present the winners.
Executive Of The Year—
A.J. (Jim) Teague, CEO and director, Enterprise Products Partners LP
Jim Teague has had a long and storied career in midstream senior manage-ment. He leads the firm ranked No. 3 on the Midstream Business Midstream 50 for 2015—the nation’s second-largest MLP. It had 2015 EBITDA of $5.3 billion on revenues of $27 billion. Assets at year-end stood at $49 billion.
He assumed the chief executive role as 2016 began, following the retirement of industry veteran Michael A. Creel.
Teague had been the firm’s COO. He came to Enterprise through Enterprise Products’ acquisition of Enterprise GP Holdings in 2010, where he was exec-utive vice president. Earlier executive assignments were with the midstream operations of Shell Oil Co., where he served as president of its Tejas Natural Gas Liquids unit. Previously, he was president of marketing and trading for MAPCO Inc.
Criteria for the award called for an executive “whose leadership has led to significant growth or has had a transfor-mational, positive change for his or her company or the industry at large.”
Enterprise certainly fits that description. An early player among midstream MLPs, the firm estimates it has done some $35 billion of organic growth projects and made $26 billion of major acquisitions since its IPO in 1998. Currently, it has some $6.1 billion in capital growth projects underway. Enterprise operates 49,000 miles of crude oil, natural gas, NGL and prod-ucts pipelines; 24 gas processing plants and 22 fractionators; plus significant salt dome storage for crude, gas, NGL and refined products.
It has pioneered new services and markets and was the first to develop the new, and previously unrecognized, export market for lightly processed con-densate before the repeal of the crude export ban. Its ATEX Pipeline created
a market for the abundant ethane pro-duced by the Marcellus and Utica uncon-ventional plays, while its new Morgan’s Point terminal on the Houston Ship Channel will provide a major Gulf Coast export point for ethane.
Deal Of The Year—The MPLX LP acquisi-tion of MarkWest Energy Partners LP
Closed in December 2015, the MPLX/ MarkWest combination was ranked as the year’s “midstream megadeal” by
Midstream Monitor, the weekly news companion of this magazine. The award criteria called for a deal that would be innovative, greater in size and scope relative to the firm’s previ-ous profile and would create the ability to grow after closing.
MPLX, the midstream MLP of Marathon Petroleum Corp., ranked No. 23 on the Midstream 50 for 2015 list with inclusion of MarkWest. EBITDA jumped to $486 million, a 193% increase from the prior year, while assets zoomed to $15.7 billion from $1.2 bil-lion. Gathering capacity now stands at 5.4 billion cubic feet per day (Bcf/d)— half of which is in Appalachia—and processing capacity is 7.5 Bcf/d, the majority of which is in the Marcellus and Utica shales. MPLX has more than 1,000 miles of crude pipelines, 1,900 miles of product pipelines and 78,000 barrels per day (bbl/d) of throughput capacity at its Ohio River barge docks.
The $15.7 billion acquisition had its critics, including MarkWest’s former CEO, John Fox. MPLX sweetened the offer with an extra $605 million as a result, giving MarkWest unitholders a 14% premium when the deal was settled.
The combined operation created significant synergies, giving MPLX the opportunity to become a major player in the rapidly growing Marcellus and Utica plays. MarkWest ranked as the second-largest gas processor in the nation and the largest gas processor in the Appalachian shale plays. MPLX, in turn, is a major pipeline operator in the region and directly serves seven Midwest refineries, including three owned by its parent.
Craig Pierson, president of Marathon Pipe Line LLC and vice president of operations for MPLX, told Midstream Business following the merger that the combined oper-ation is “a pretty remarkable place. MarkWest is the basin’s largest gas processor and fractionator.
“Through MarkWest, we have NGL marketing and some transportation solutions, and we have the transporta-tion solutions … that MPLX plans to offer. As well as being a local consumer through Marathon Petroleum, we’re looking at long-haul options to move NGL to the Northeast and also the East Coast and the Gulf of Mexico.”
Current capital projects include a major expansion of assets serving Utica producers, including the new Cornerstone Pipeline that will move natural gasoline to Midwest and Canadian refiners and a new alkylate
plant that will convert butane into gaso-line feedstocks.
“I think we are going to be able to improve the netbacks of producers in ways that they will find attractive in a difficult market,” Pierson said, adding that the Appalachian region is “under-served with pipelines, and MPLX is going to help fill that void soon.”
Project Of The Year—Alpha Crude Connector LLC (ACC), a joint venture between Frontier Energy Services LLC and Concho Resources Inc.
No producing province has seen the level of sustained development that the Delaware Basin has seen—despite the downturn—while still offering great growth opportunities. “We’re excited that our ACC system is up and operational,” Dave Presley, Frontier president and CEO, told Midstream Business. Volumes have been strong, and the system has excellent growth prospects, he added. Frontier serves as ACC’s operator.
Production in the Delaware has run ahead of existing pipeline gathering infrastructure, and a primary goal of the project was to get trucks off the roads of West Texas and Southeast New Mexico. ACC serves producers
in Lea and Eddy counties, N.M., and Culberson, Loving, Reeves and Winkler counties, Texas.
ACC was a good fit for the award criteria, which sought nominations of projects “of strategic significance” that filled a critical need and resulted in business growth. Built at a cost of more than $250 million, ACC is a common carrier, 400-mile crude pipe-line gathering system that serves the northern end of the prolific Delaware. It can move more than 100,000 bbl/d to downstream customers—delivering crude into four pipelines that serve the Midland, Texas, and Cushing, Okla., crude markets; local refinery demand; and a rail terminal. The system has 320,000 bbl/d of storage, plus a four-bay truck terminal. Service began in late 2015.
The partners designed the system for expansion and added multiple cus-tomers during a series of open seasons. ACC functions as a low-cost system that can build to producers’ leases or handle trucked barrels. It can freely connect to other crude systems, Presley said.
Building the system wasn’t easy, particularly on the New Mexico side, with its large blocks of heavily regu-lated federal land. Frontier spent more than 18 months working with the U.S. Bureau of Land Management and a dozen other agencies to address envi-ronmental concerns and regulations, he added.
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