SAN ANTONIO—There are two key production curves—NGL and condensate—coming out of the Eagle Ford Shale that will present enormous opportunity for midstream companies, Jim Webster, general manager for midstream at Phillips 66, told a crowd of shale players at Hart Energy’s 2014 DUG Eagle Ford conference.

“In both, there is a tremendous role that Eagle Ford plays in its contribution to the volume growth. NGL is expected to more than double between now and 2025 in Eagle Ford, while the remaining NGL production has a growth rate of about half that,” he said.

And as for the play’s contribution to condensate production, Webster described it as “really remarkable.”

“As producers continue to drill in liquids-rich plays, overall production volume is expected to increase. And, there’s an awful lot of talk about this whole condensate area of growth,” he explained. “Between now and 2025, a roughly 120% increase in condensate production will be seen in the Eagle Ford, while the U.S. production will only increase by about 20%.”

During the long term, Webster said, it could mean that Eagle Ford volumes transported to the U.S. Gulf Coast will be competing for space, especially if additional and incremental fractionation, storage and export infrastructure do not keep pace with the production in transportation.

And that’s where Houston-based Phillips 66, the 2-year-old midstream/downstream spinoff from ConocoPhillips, is stepping in.

Next year, the company’s Sweeny Fractionator 1 will be online and a second fractionator train is on the drawing board with a targeted startup in 2017.

“The Phillips 66 midstream fractionation hub in Sweeny would function as a satellite alternative to the concentration in Mont Belvieu [Texas] and will be integrated with pipeline with [that facility].”

In addition, Phillips 66 is moving forward with plans for its Freeport LPG export terminal. As Webster explained, Freeport has some attractive qualities that will make it especially competitive with the Houston Ship Channel. An LPG ship has to travel 50 miles to enter open waters from the channel, and those vessels may only travel during daylight hours, he said. Freeport is three miles outside of open water.

“Additionally, the extreme growth the Houston Ship Channel has seen—while it’s great for our economy and the Houston economy and the Port of Houston—it’s not necessarily [great] for reliable VLGC [very large gas carrier] transit, particularly at 50 miles away with increasingly congested traffic,” Webster said. “Our [Freeport] facility will be able to turn around VLGC in about one day, and we’re excited to serve the international market and give producers the opportunity to potentially introduce international pricing into their portfolio.”

As production of NGL shale has grown across the country, Webster said, domestic demand for LPG is not growing. Propane demand is flat, and it’s going to continue to be flat at best. Butane demand in the U.S. will be declining as it’s backed out of the gasoline pool, particularly by other higher-vapor renewable products, he said.

“Fortunately at the same time we see production increasing, we should see an increase in demand for global LPG,” Webster said, adding that declining production in the North Sea, coupled with growth in Europe and Asia, could provide a boost to U.S. producers.

Deon Daugherty can be contacted at ddaugherty@hartenergy.com or 713-260-1065.

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