eagle ford and south texas ngl infrastructure · reveille gas plant / falcon ngl line . 200 mmcfd...

Eagle Ford and South Texas NGL Infrastructure

September 30, 2014

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HEP Update Company Update

Production, Processing, & Liquids Handling in the

Eagle Ford Observed Themes

HEP’s Processing & Liquids Handling Solutions

Today’s Agenda

Reveille Gas Plant, Live Oak Stabilizer, & Brownsville

Terminal

Where We Started… June 2011

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Rich Gas Gathering

Eagle Ford Pipeline Construction

Founded in June 2011

► ~280 miles of gathering pipelines acquired from Clear Springs Energy

► Acquired Bottom Line Services (Pipeline Construction)

► Non-Traditional Equity Sponsors

Initial Strategy

► Vertically integrated

► Eagle Ford rich gas gathering

Where We Are Today September 2014

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Rich Gathering & Processing

Liquids Projects

Mexico Projects

1) MD System

2) EFG System

3) CCG / Reveille Gas Plant

4) Live Oak Rail & Stabilizer

5) Brownsville Terminal / Fuel Oil Station

6) Mexico Exports

7) GT Logistics

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2 3

Lean Gathering

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Terminal

Observed Themes in Today’s Market South Texas Focus

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1) Liquids & Liquids Rich Drilling

2) Application of New Drilling & Completion Technology to Old Zones (Olmos, Escondido, Pearsall, Buda)

3) Renewed Interest in Lean Gas Drilling

4) Mexico Exports

South Texas Hz. Liquids Production(1)

Nat. Gas Exports to Mexico(2)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Expo

rts

(Bcf

/d)

Mexico Mexico Forecast

Note: (1) HPDI (2) Tudor Pickering Research

Current Natural Gas Exports to Mexico total 2.3 Bcf/d

0

250,000

500,000

750,000

1,000,000

1,250,000

1,500,000

Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14

Sout

h Te

xas

Hz.

Pro

duct

ion

(Boe

/d; 6

:1)

South Texas Hz. Liquids Production

South Texas Processing Capacity NGL Infrastructure Expansion Facilitates Growth

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South Texas processing capacity has grown by ~4 Bcf/d since 2010

Producers continue to fill subscribed capacity

Increased producer activity and niche markets present further opportunities

Y-grade expansions facilitate processing growth and market liquidity

_____________________________________ Source: Hart Energy

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Terminal

Reveille Gas Plant / Falcon NGL Line 200 MMcfd Cryogenic Processing Plant in Webb County, Texas

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Project Theme: Listened to customer needs and engineered a solution

Designed to process lower GPM gas (relative to Eagle Ford production) from Olmos and Escondido formations

Plant location feasibility

► NGL access to Mt. Belvieu

► 58 mile y-grade line to Enterprise at Cotulla

► 18,000 BBL/D initial capacity

► Residue gas access to Mexican markets

NGLS (Access to Mt. Belvieu)

Residue Gas to Mexico

Falcon NGL Line

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Strategic Rationale ► Attractive fee based rail

business

► Strategic Eagle Ford location with rail, pipeline, trucking and refinery access

► Increases exposure to crude, condensate and NGLs

► Significant organic growth potential from midstream operations

Overview ► Ability to handle both

manifest and unit trains

► Attractive bolt-on midstream opportunities

− Liquids stabilization

− Blending & treating facilities

− Crude, condensate, NGL & nat. gas pipeline injection points in area

► Operations commenced in January 2014

Live Oak Rail Facility

The Live Oak location is desirable due to multiple pipeline and rail options for liquids products

Rail optionality to transport liquid products to premium markets

Close proximity to Harvest, NuStar, Kinder Morgan/Magellan for crude and condensate transport

Close proximity to DCP, Enterprise, Energy Transfer for y-grade transport

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Truck Routes to Off-Spec Condensate Markets

Strategic Rationale No firm downstream

market for high pressure off-spec condensate

Illustrative Example:

- A large Eagle Ford producer was currently trucking the Product to the Ft. Worth basin and East Texas on an interruptible basis

- Incurring significant trucking / demurrage fees

The Live Oak

Stabilizer provides a firm field-level sales point and processing outlet for the product

Live Oak Stabilizer Off-Spec Condensate Stabilization

Live Oak Stabilizer Operational Characteristics

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In-service as of August 2014

Total facility capacity of 15,000 bbl/d

6 truck loading and unloading racks

10,000 bbl/d of off-spec stabilization and treating

Capable of handling product up to 205 psig vapor pressure with color and/or corrosive characteristics

Pipeline connections for lean fuel gas, rich gas overhead, and y-grade

Close proximity to crude and condensate terminals and pipeline markets

Live Oak Stabilizer Process Overview

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Product Sources: ► Field Stabilizer Overhead ► Pipeline Drip ► Refrigeration / JT Plants ► Light Condensate Wells

Pressurized Condensate Truck

On-Spec Volumes

On-Spec Storage Tanks

NGL Pipeline

Off-Spec Volumes

Off-Spec Storage Tanks

1st Stabilizer Tower

(“Stripper”)

Rich Gas

2nd Stabilizer Tower (“De-Butanizer”)

Conditioned Condensate

Rich Gas / NGLs

9# Stabilized Condensate

Atmospheric Truck

Condensate Storage Tanks

Rich Gas Pipeline

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Strategic Rationale ► Current market warrants

additional services

− Total current capacity of 3.6 MMBbl

− Merchant capacity is fully subscribed

► Attractive terminal location

− Access to Gulf of Mexico via 17-mile ship channel

− Located in the Foreign Trade Zone

− Dedicated rail facilities

− Access to oil dock

Overview ► Initial capacity of 225,000

Bbls

► Operations commenced for anchor customers in March 2014

► Fully operational in September 2014

Phase 1 Site

Brownsville Terminal Overview

Brownsville Terminal Existing Operations and Services

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Storage

Up to 225,000 Bbls of multi-purpose storage

Dedicated pipelines on both receipt and delivery systems

Heating, Blending and Mixing systems

Radar Gauging

Marine

Panamax class dock with capacity for 4 barges, one ocean-going barge, or one Panamax class marine vessel

Existing public dock with low utilization currently

Maintained depth of 34 ft. at low water levels

Provides us to service our clients immediately

Rail

10 car capacity

Additional land provides expansion capabilities for up to 100 cars

Potential for Unit-Train movements

Balance of Plant

Polymer blending for saturated waxes and viscosity improvement of lubricants

Automated truck rack with on-scale loading

Medium pressure steam for heating of wax, lubes or fuel oil

Radar gauging for close inventory management

Mechanical mixers and Jet Nozzle for blending

Key Takeaways

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1) Producer focus on liquids and liquids rich drilling has resulted in a shift in midstream strategy for many

2) The rapid growth in Eagle Ford NGL and condensate production will continue to create unique opportunities

3) Increases in terminal and storage capacity will allow the industry to take advantage of export opportunities brought on by increasing domestic supply

Questions

September 30, 2014

eagle ford and south texas ngl infrastructure · reveille gas plant / falcon ngl line . 200 mmcfd...

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