Post on 04-Aug-2018
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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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Lean Gathering
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HEP Update Company Update
Production, Processing, & Liquids Handling in the
Eagle Ford Observed Themes
HEP’s Processing & Liquids Handling Solutions
Reveille Gas Plant, Live Oak Stabilizer, & Brownsville
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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HEP Update Company Update
Production, Processing, & Liquids Handling in the
Eagle Ford Observed Themes
HEP’s Processing & Liquids Handling Solutions
Reveille Gas Plant, Live Oak Stabilizer, & Brownsville
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