MPLX LP management said development costs in the Permian Basin and Marcellus Shale remain conducive for drilling activity, and the long-term production outlook for its producer customers provides the midstream company with a steady source of growth opportunities.
MPLX is progressing on its 2023 capital spending programs, which include allocations of $800 million for growth and $150 million for maintenance on natural gas, crude and natural gas liquids (NGL) projects, mainly in the two large basins.
“We remain really bullish in the Permian,” said MPLX CFO John Quaid.
In the Logistics and Storage business unit, MPLX has seen strong demand for Permian takeaway since completing the expansion of the Whistler Pipeline to 2.5 Bcf/d from 2.0 Bcf/d.
Work is progressing on the associated ADCC Pipeline lateral, a 43-mile, 42-inch diameter natural gas extension from the Agua Dulce Hub in South Texas to Corpus Christi LNG. Cheniere Energy Inc., which has a 30% stake in the pipeline, sanctioned the third stage of the Corpus liquefied natural gas export project last summer. The conduit could be in service in the third quarter of 2024.
MPLX recorded an average 6.3 Bcf/d in gathered volumes during the third quarter of 2023, an increase of 3% year/year. Processed volumes rose 5% to an average 9.0 Bcf/d. Fractionated volumes averaged 613,000 b/d, up 9% year/year.
Looking at the NGL value chain, MPLX said growing demand for NGL takeaway from the Permian’s Delaware and Midland sub-basins to the fractionation hub in Sweeney, TX, supports the expansion of the long-haul Bangle pipeline to about 200,000 b/d. The project has an expected completion date in the first half of 2025.
Quaid said producer demand in the Permian and Marcellus is driving investments in the gathering and processing segment as well.
The midstreamer continues to work toward bringing online its sixth 200 MMcf/d processing plant in the Permian, Preakness ll, in the first half of 2024. It plans to build and bring online in the second half of 2025, Secretariat, its seventh gas processing plant in the basin.
“Once operational, these plants will bring our total processing capacity in the Delaware Basin up to 1.4 Bcf/d,” said Quaid.
In the Marcellus, MPLX is progressing Harmon Creek ll, a 200 MMcf/d processing plant expected online by June 2024.
Gathered volumes in the Marcellus averaged 1.4 Bcf/d in 3Q2023, up 4% from a year ago. Processed volumes averaged 5.8 Bcf/d for the quarter, up 5%, while fractionated volumes averaged 546,000 b/d, up 10%.
Looking ahead, MPLX has a small stake in the greenfield Matterhorn Express project. The 42-inch diameter pipeline would traverse 490 miles, with direct connections to processing facilities in the Permian Midland sub-basin. It also would have a direct link to the 3.2 Bcf/d Agua Blanca Pipeline, a joint venture between WhiteWater Midstream LLC and MPLX.
“Would have loved to have been a bigger player, but I think, as the way those work, your participation is driven by the producer volume you bring to the project,” Quaid said. “So, we’ll continue to look for those opportunities where it makes sense.”
MPLX sees potential to improve processing plant utilization and flows on regional pipes such as Cornerstone in the Utica Shale. The midstream company also is working with Marathon Petroleum Corp. (MPC) to develop two hydrogen hubs — one in Appalachia and one in the Heartland. The projects recently received $7 billion from the DOE.
Regarding acquisitions, “big, sexy projects” have not been “our forte,” but the company has been investing in smaller assets “where we get a really good return for little to no capital,” said CEO Michael Hennigan.
MPLX is looking at opportunities to acquire high-quality assets dispersed into the market by some of its competitors and peers that “we know how to run and operate” and “we have a customer that needs them,” said Quaid.
MPLX reported net income of $918 million (89 cents/share) for the third quarter, lower than $1.428 billion ($1.36) in the same quarter a year ago.
