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AltaGas gets OK to expand BC plant; EnLink asset sales to aid Okla. build-out

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AltaGas gets OK to expand BC plant; EnLink asset sales to aid Okla. build-out

AltaGas gets approval to double capacity of British Columbia gas facility

The British Columbia Oil and Gas Commission granted approval to AltaGas Ltd.'s proposed expansion of the Townsend facility, which would double its capacity to 396 MMcf/d.

The initial expansion, called Townsend phase 2, would add a 100-MMcf/d shallow-cut natural gas processing facility, expected to cost C$85 million to C$95 million, according to a Dec. 22 news release. Incremental field compression equipment would also be provided to deliver raw gas production from the Blair Creek area to Townsend, which would cost C$35 million to C$45 million.

Townsend phase 2's full capacity would be committed to the driller Painted Pony Petroleum Ltd. through a 20-year take-or-pay agreement. Commercial operations are expected by October 2017.

Pair of EnLink divestitures to help fund Okla. build-out

EnLink Midstream Partners LP and EnLink Midstream LLC agreed to a pair of asset divestitures totaling $275 million in an effort to shore up their balance sheets and fund an expansion project to reinforce the companies' STACK play position in Oklahoma.

EnLink Midstream agreed to divest its 31% stake in Howard Midstream Energy Partners LLC for about $190 million to Alberta Investment Management Corp., with the deal set to close in the first quarter of 2017. EnLink Midstream also closed an agreement to sell its 140-mile North Texas natural gas pipeline in the Barnett Shale to Atmos Energy Corp. on Dec. 20, according to a news release by the EnLink companies.

Along with planned at-the-market equity issuances, the proceeds from these transactions are expected to fund most of EnLink's equity needs for its 2017 CapEx program, such as the first installment payment of $250 million related to the January 2016 acquisitions of certain subsidiaries of Tall Oak Midstream LLC and an approximately $100 million investment to construct the new 200-MMcf/d Chisholm III plant, expected to be in service by the end of 2017. Once the Chisholm III expansion is completed, EnLink's central Oklahoma processing capacity will total about 1 Bcf/d, making it one of the largest gas processors in the STACK.

Propane market firms on tightening inventories, cold temperatures

Propane prices gained about a penny per gallon in the week ended Dec. 23 as trade was bolstered by relatively high winter heating demand and a resultant drop in inventories. Activity was subdued as traders wrapped up for the Christmas holiday.

Lone Star pipeline grade propane at Mont Belvieu, Texas, rose 1.30 cents to trade at 64.30 cents per gallon in the week ended Dec. 23, while non-LST propane increased 1.10 cents to trade at 63.55 cents per gallon. Prices at the hub in Conway, Kan., gained 0.95 cent and traded at 62.35 cents per gallon.

The propane market was boosted by a wave of cold temperatures early in the week, which helped to keep demand levels high and resulted in a sharp drop in inventories. A surge in heating degree days may cause residential prices to rise further in coming weeks.

Propane prices could face upside risk on inventory normalization

Cold and wintry weather across the Midwest in December weighed on propane inventories as consumers filled tanks in anticipation. While prices have been bolstered by strength in crude oil recently, increased heating demand could also remain a factor.

Temperatures reached into the negative teens in the northern parts of the Mountain and North Central regions as well as most of New England in the week ended Dec. 17 and the Midwest experienced another bout of sub-zero temperatures early in the week ended Dec. 24, according to the National Oceanic and Atmospheric Administration.

Temperatures are expected to moderate over the next eight to 14 days, but the December cold should continue to weigh on inventory levels as propane tanks are refilled.