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American Midstream, Targa to form NGL transportation JV in Gulf of Mexico

American Midstream Partners LP struck a joint venture agreement with Targa Midstream Services LLC to increase NGL deliveries in the Gulf of Mexico through a pipeline conversion project.

The joint venture, Cayenne Pipeline LLC, would carry Y-grade NGLs from the 750-MMcf/d Venice Energy Services Co. LLC gas processing plant operated by Targa to Enterprise Products Partners LP's pipeline at Toca, La., connecting to Enterprise's Norco fractionator, according to an Aug. 8 news release.

American Midstream plans to convert an underused natural gas pipeline into an NGL pipeline, which would have an initial capacity of more than 40,000 barrels per day and the ability to have throughput capacity of over 50,000 bbl/d. The project has obtained change of service permits and is underpinned by a 15-year contract for all NGL production from the Venice plant with inlet from six offshore pipelines in the Gulf of Mexico.

Under the deal, Targa will operate the venture while both American Midstream and Targa would own 50% economic interests and 50% voting rights each, as well as equal share of costs of conversion and other construction.

"Formation of Cayenne is another step in executing our strategy of linking offshore gas supply to onshore demand," said Lynn Bourdon III, president and CEO of American Midstream. "The project will benefit the offshore producer community while driving a significant increase in the value of a pipeline by altering its service."

The project is scheduled to become fully operational by the end of 2017.