Anadarko’s New Natural Gas Plant Will Help Its Eagle Ford Shale Operations

by Trefis Team
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Anadarko Corp (NYSE:APC) is close to completing a new $100 million natural gas processing plant in Texas. The Brasada plant will process natural gas produced from the company’s Eagle Ford shale wells. Components like methane, ethane, propane and butane will be separated before they are transported through the pipeline for further processing. The plant is designed to process 200 million cubic feet of gas per day (MMcf/d) but can be expanded to process up to 400 MMcf/d, if needed. This could lead to capacity expansion if Anadarko undertakes processing of third party gas at some point, which would help generate additional revenues. [1]

Although the Eagle Ford shale region has a lot of potential, it cannot be exploited to the fullest until the supporting midstream infrastructure comprising gathering systems, pipelines and processing plants is developed to move oil and gas to market. The Brasada plant is part of the midstream development currently taking place in the region. It will help Anadarko monetize the gas and natural gas liquids produced from its large Eagle Ford deposits.

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Anadarko’s Eagle Ford Operations

Anadarko explores for shale oil and gas in a gross area of 400,000 acres in the Dimmit, LaSalle, Maverick and Webb Counties in the Eagle Ford region. Its current resources are estimated at over 600 million barrels of oil equivalent (MMBOE), 65% of which is estimated to be liquids. In 2012, the company achieved a gross processed production record of approximately 152,600 BOE per day. With its higher-margin oil and natural gas/condensate, the Eagle Ford shale region is among the most capital-efficient shale plays in Anadarko’s U.S. onshore portfolio. [2]

Anadarko currently operates approximately 380 miles of oil and natural gas pipelines throughout the southwest Texas region, with additional gathering facilities that support more than 50% of its Eagle Ford shale production. In March 2012, Anadarko and Western Gas Partners began construction of the Brasada gas processing plant. The Brasada plant and the construction of an additional 200 miles of gathering lines will enhance the value of Anadarko’s Eagle Ford assets.

The Brasada Plant

All of Anadarko’s Eagle Ford acreage is located to the west of the Brasada plant, and a pipeline network will bring natural gas into the facility as well as move it off site to market. The pipeline will enable the company to eliminate its dependence on trucks. This will speed up transportation of its gas as there are too many trucks on the road in the region which causes a slowdown in the overall movement.

The Brasada plant also will also reduce flaring of methane in the field because Anadarko will be able to move it directly to market through pipelines. Flaring of methane is a common industry practice in cases where transportation is not viable.

From the plant, natural gas liquids will travel further through a pipeline to a plant in Yoakum and to fractionation facilities in Mont Belvieu, east of Houston. Gas also will go south to Corpus Christi, where it can be used in refining or fed into the existing network of interstate pipelines. [3]

We have a price estimate of $80 for Anadarko.

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Notes:
  1. Anadarko’s plant nears completion, Fuelfix []
  2. Anadarko Eagle Ford Operations, Anadarko Website []
  3. Anadarko’s plant nears completion, MySanAntonio []
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