Targa to build two new gas-processing plants in the Permian: company

Targa Resources will start constructing two new natural gas-processing plants in the Permian Basin as gas volumes continue to soar and overall takeaway capacity faces increasing tightening, executives said during an earnings call Feb. 25.

Targa will build the 275 MMcf/d Legacy II cryogenic gas-processing plant in the Midland Basin -- the first Legacy plant is slated for completion late this year -- and the 275 MMcf/d Midway plant located in between the Midland and Delaware basins to service both of the Permian's primary basins. Legacy II would come online in the second quarter of 2023 and Midway in the third quarter next year.

CEO Matt Meloy said oil and gas volumes are ramping up across both basins and the Midway plant will allow more flexibility to flow volumes between the two systems, improving efficiency across the board.

The addition of Midway will allow Targa to idle one old Sand Hills processing plant that had operational problems, higher maintenance costs and limited capacity, he said.

Following years of massive buildout of long-haul crude pipelines, natural gas infrastructure is proving more critical now in the Permian. With stricter regulations on eliminating gas flaring, the fates of oil and natural gas within the Permian are more linked than ever and more gas pipelines and processing plants are needed in the near term.

Apart from the associated gas that comes from oil production, natural gas demand is also coming from high prices and from the need to feed the new LNG export terminals opening along the US Gulf Coast. And stricter regulations from the New Mexico side of the Delaware Basin are creating more demand for gas processing because they require pipelines be in place for associated gas before the oil production is initiated from new wells. So there is more direct planning with the oil producers.

With more gas and NGL volumes coming from the Permian, Targa also will commence a modest expansion and its Galena Park facilities near Houston to hike loading rates and refrigeration capacity for propane exports and more. The refrigeration expansion would increase propane-loading capabilities by another 1 million b/month, Meloy said.

Targa's estimated 2022 growth capital budget is about $750 million, including some spending on the Legacy II and Midway plants.