The Lone Star Pipeline

Written By Brianna Panzica

Posted June 22, 2011

Natural gas production in Texas is continuously increasing.

The level of production the state is seeing is requiring more options for transferring natural gas liquids (NGL).

This week, Energy Transfer Partners (NYSE: ETP) and Regency Energy Partners (NASDAQ: RGNC) announced a plan for a $700 million investment in building a NGL pipeline in Texas through their joint venture Lone Star LLC.

The pipeline will extend 530 miles, from Winkler County in the west of Texas to Jackson County, near the Gulf coast, where the Jackson County processing plant is located.

The minimum capacity of the pipeline will be 130,000 barrels a day, but this can be increased if necessary.

Currently 65% of that capacity has been distributed to producers and processers with agreements lasting 15 years.

ETP plans to pay 70% of the cost of the pipeline, while RGNC will supply the additional 30%.

The project is set to be completed by the first quarter of 2013.

Lone Star currently owns a 1,066 mile-long pipeline in Mont Belvieu, Texas, as well as 43 million barrels of storage capacity at that location. The venture works with storage and transportation of NGL.

The company operates in Texas, Louisiana, and Mississippi.

ETP is the owner of 17,500 miles of pipelines and focuses on working with NGL, especially in processing, transporting, and storing, similar to RGNC.

ETP and RGNC are partners Energy Transfer Equity (NYSE: ETE), which announced last week plans to buy their competition Southern Union (NYSE: SUG) for $4.1 billion.

On Tuesday ETP shares closed at $48.17, and RGNC shares closed at $25.22.

That’s all for now,


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