DCP Midstream has unveiled an additional expansion of the Sand Hills natural gas liquids pipeline, with plans to initially invest $105m towards long-lead equipment and right-of-way.
The pipeline will be expanded in a phased process. The first phase of expansion will see the company increase the pipeline capacity by 85 thousand barrels per day (MBpd) to take its overall capacity to 450 MBpd.
Upon completion of the first phase, DCP Midstream expects to include partial looping of the pipeline. It will also invest about $500m to add seven new pump stations.
DCP Midstream chairman, president and CEO Wouter van Kempen said: “We continue to high-grade our strategic portfolio to focus on strong return, accretive, fee-based growth projects at lower risk.
“The Sand Hills Pipeline has been an incredible success story founded upon being a producer-friendly pipe that offers flexibility and optionality through our multiple delivery points serving the Gulf Coast. With our phased expansion approach, we are able to match capital outlay with supply growth.”
The expanded pipeline is expected to be operational during the second half of next year.
DCP Midstream said that in future phased expansion, it may need to add full loop of the pipeline to increase its capacity by more than 100 MBpd to at least reach up to 550 MBpd.
The latest announced expansion adds up to an existing expansion to 365 MBpd, which is likely to be operational in the fourth quarter of the year. The earlier expansion included plans for three additional pump stations and a lateral to mainly increase Permian capacity.
DCP Midstream owns two-thirds of stake in the Sand Hills pipeline project while the remainder stake is held by Phillips 66.