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DCP Midstream boosts scale of Sand Hills NGL pipeline expansion

DCP Midstream LP launched an additional expansion of its Sand Hills NGL pipeline that would increase capacity by 85,000 barrels per day to about 450,000 bbl/d, a project estimated to cost about $500 million.

The partnership expects to spend $105 million on long-lead equipment and right of way, according to a May 30 news release. The initial phase of the expansion will include partial looping of Sand Hills and seven new pump stations. A full loop of the pipeline, possibly increasing capacity by more than 100,000 bbl/d to at least 550,000 bbl/d, may come in another phase of the expansion. The pipeline carries product from the Permian Basin to the Mont Belvieu market on the Texas Gulf coast.

The plan is in addition to the existing expansion that would boost capacity to 365,000 bbl/d by adding three new pump stations and a lateral. This expansion is already underpinned by long-term, third-party plant commitments.

Proceeds from the partnership's recent divestiture of its noncore Wyoming natural gas gathering system would be used to help fund the additional expansion, expected to be in service by the second half of 2018.

The Sand Hills pipeline is owned two-thirds by DCP, with the rest owned by Phillips 66 Partners LP.