The Williams Companies’ (WMB) Cureton Front Range acquisition in Nov’23 included 260 miles of gas gathering and 60 MMcf/d of gas processing plant capacity (orange triangle in the map). A big part of the strategic rationale for acquiring the plant was downstream integration.
The Cureton plant was delivering NGL volumes down third party pipelines instead of its 50% owned Overland Pass Pipeline (OPPL) which delivers NGLs to its fractionation facility in Conway, Kansas (green star). Alternatively, WMB can ship Cureton-produced NGL volumes all the way down to the Mt. Belvieu NGL market (red star) via WMB’s Bluestem pipeline (yellow line) and Targa’s (TRPG) Grand Prix pipeline (orange line) to TRGP’s Cedar Bayou frac train 7, which WMB has a 20% interest in.
WMB management noted in a Feb’24 call they were in the process of moving gas from a third-party plant to Cureton to capture NGLs for transportation on OPPL. We estimate Cureton produces ~12 Mb/d of NGLs, which translates to a $19MM annual gross revenue uplift on OPPL and Bluestem. The data supports the narrative as reflected in the figure below. According to FERC filings, Bluestem reported a 9 Mb/d increase in NGL throughput 4Q23 to 1Q24 and we expect the same increase in Targa’s Grand Prix Oklahoma volumes when they report their 1Q24 FERC financials on July 10th.
The bump in Bluestem volumes has also boosted Targa’s Grand Prix asset system volumes that have plateaued for Permian egress due to capacity constraints there. As East Daley discusses in its Capital Intelligence webinar this week, past and future transactions will rely on NGL capture for value-chain economics with exposure to international demand growth.—Rob Wilson, CFA Tickers: WMB, TRGP
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