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Front Range project gives an edge in gas liquids

Published on NewsOK Modified: July 26, 2014 at 10:11 am •  Published: July 26, 2014

COLORADO SPRINGS, Colo. (AP) — The Front Range Pipeline that runs through eastern El Paso County has positioned Colorado to take advantage of the burgeoning market for natural gas liquids.

The pipeline, which began operating in February, is expected to become increasingly important as the state's production of natural gas liquids continues to grow. Last year, the Denver-Julesburg basin produced about 53,000 barrels of NGLs per day; by 2019, that number is expected to nearly double, according to research by Bentek Energy, a Denver-based energy analytics firm.

NGLs include ethane, propane, butane and natural gasoline.

Every day, the 435-mile pipeline transports about 80,000 barrels of NGLs from Weld County, which sits atop the Denver-Julesburg basin, to Skellytown, Texas. There, it connects to the Texas Express pipeline, which carries the liquids to Mont Belvieu, Texas, the largest NGL hub in the country. The liquids are then stored, processed and distributed.

Construction of the pipeline, which extends about 24 miles through northeastern El Paso County, began last year. It runs underneath more than 50 tracts of private property in the county, according to public records, and lies at least 3 feet below the ground.

The companies that own the pipeline - Texas-based Enterprise Product Partners and Anadarko Petroleum and Denver-based DCP Midstream - had to purchase rights of way from the property owners before moving forward with the project. The companies, which together form Front Range Pipeline LLC, secured 25-foot easements on both sides of the pipeline that restrict property owners' use of that space.

The El Paso County Public Services department required a $3.3 million bond for Front Range's use of county roads to construct the pipeline. The corporation will pay property taxes after the State Department of Revenue assesses value of the pipeline and apportions it to the affected counties next year. Until then, no one can say how much the county might receive.

The joint venture offers Colorado NGL producers a direct route to Mont Belvieu. Before construction of the Front Range Pipeline, Colorado NGL producers transported their products using the Overland Pass and Mid-America pipelines, both of which pass through the state's oil and gas basins. But neither connects directly to Mont Belvieu.

"Producers in (the Denver-Julesburg basin) now have the capacity to ramp up their drilling plans," said Rick Rainey, vice president of public relations for Enterprise.

By 2020, the pipeline's daily transport volume is expected to increase to 107,000 barrels per day because of the projected expansion of the NGL market, Rainey said. It has the capacity to carry 150,000 barrels per day.

The boom in the NGL market is largely a result of a drop in domestic natural gas prices and an increase in crude oil prices, according to research by the U.S. Energy Information Administration. The development of horizontal drilling and hydraulic fracturing technology during the past decade allowed oil and gas producers to extract large amounts of natural gas from dry shale plays. But supply exceeded demand, pushing prices down and encouraging producers to turn to crude oil and NGLs, two commodities that often correlate in price.

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