East Daley Analytics – Dissecting the Energy Value Chain
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A New NGL Contender Enters the Ring

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MPLX is positioning to join a small group of companies that own all parts of the NGL value chain linking Permian Basin supply growth to international demand.

In mid-December, MPLX filed an air permit with the Texas Commission on Environmental Quality (TCEQ) for NGL fractionation and storage. The project would be the company’s first investment in NGL fractionation on the Gulf Coast. On the company’s recent 4Q23 earnings call, MPLX also announced it has acquired its partners' 40% interest in two Delaware Basin gas processing plants – Tornado I & II.

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MPLX will have 1.4 Bcf/d of gas processing capacity after completing the Preakness II (+200 MMcf/d, ISD 1Q24) and Secretariat (+200 MMcf/d, ISD 2Q25) projects. Users can review the counterparties and historical performance of MPLX gas plants in Energy Data Studio, and East Daley’s company forecast in the MPLX Financial Blueprint.

The new capacity MPLX is building will make way for producer-backed growth, fueled by Coterra Energy (CTRA) and GBK (see volumes breakdown in figure from Energy Data Studio). As a result, MPLX is likely to produce almost 150 Mb/d of NGLs from the tailgate of its own plants by early 2025.

As we discuss in the 2024 Dirty Little Secrets annual, East Daley believes a few midstream players are poised to link together disparate parts of the NGL value chain and try to mimic the success realized by Energy Transfer (ET), Enterprise Products (EPD) and Targa Resources (TRGP), the other three vertically integrated behemoths in NGLs.

MPLX is emerging as one of those players making a move. In addition to the 1.4 Bcf/d of gas processing capacity in the Delaware, MPLX owns a 25% interest in the BANGL NGL pipeline to move liquids from its plants. BANGL provides access to the Corpus Christi and Sweeney NGL markets on the Texas Gulf Coast, where NGL storage, fractionation and export docks are in place.

The air permit MPLX filed with the TCEQ could be a first step to owning frac capacity. Even with other fractionation expansions already announced by competitors (see figure), MPLX has an opportunity to participate in building additional frac capacity to meet NGL supply growth on the Gulf Coast. MPLX has entered the chat. – Rob Wilson, CFA Tickers: EPD, ET, MPLX, TRGP.




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