Atlas Pipeline Partners LP (NYSE: APL) plans to construct a new 200-MMCFD cryogenic processing plant to accommodate rapidly increasing Permian production. The new facility, to be known as the Edward plant, will be constructed to have initial capacity of 100 MMCFD, which is expected to be in service in the second half of 2014.
As production increases behind the system, placement of additional compression and refrigeration equipment to increase the plant's capacity to 200 MMCFD, will come in service as needed. Completion of the full facility will increase processing capacity at the West Texas system from 455 MMCFD to 655 MMCFD, expanding further beyond the 200 MMCFD Driver plant addition that was brought into service in April 2013.
The expected cost for the Edward plant itself is estimated to be $100-120 million net to the Partnership, which includes both phases of the expansion of the plant, with the majority of the plant CAPEX being deployed in the 2013-2014 time period. Additionally, future CAPEX will be deployed in the form of expected compression and well connection costs as needed to fully utilize the Edward plant's capacity.
Atlas Pipeline's partner on the West Texas system, Pioneer Natural Resources Inc. (NYSE: PXD), which owns a 27.2% interest in the facility, will participate in the project’s costs and cash flows and will anchor the production growth behind the expansion, complemented by numerous third-party producer customers.
"We are excited to announce another major expansion of 200 million cubic feet per day of future processing capacity at our West Texas facility,” stated Eugene N. Dubay, CEO of the Partnership. “This expansion, coming just on the heels of the 200 million cubic feet per day Driver plant that was just brought into service this last quarter, shows how active producers are in the Permian, including our partner, Pioneer. By the time Edward is fully implemented, our capacity will have more than tripled in West Texas in less than six years. We will continue to invest in our assets to serve our customers as opportunities arise to ensure we are the service provider of choice in the areas in which we operate."
Atlas Pipeline Partners is active in the gathering and processing segments of the midstream natural gas industry. In Oklahoma, southern Kansas, northern and western Texas, and Tennessee, APL owns and operates 14 active gas processing plants, 18 gas treating facilities, as well as approximately 10,600 miles of active intrastate gas gathering pipeline. APL also has a 20% interest in West Texas LPG Pipeline Limited Partnership, which is operated by Chevron Corporation.