August 26, 2008
DCP Midstream Partners, Plains Exploration & Production, and Delta Petroleum to Expand Piceance Basin Gathering System for $150 Million
DENVER, Aug. 26 /PRNewswire-FirstCall/ -- DCP Midstream Partners, LP (the Partnership), operator and 70 percent owner of Collbran Valley Gas Gathering, LLC (CVGG), today announced that CVGG has entered into definitive agreements to invest approximately $150 million over a multi-year period to construct approximately 20 miles of 24 inch diameter gathering pipeline, compression and liquids handling facilities to support the increasing need for natural gas infrastructure in the Collbran Valley (also known as Plateau Valley) area of the Piceance Basin, located in western Colorado. The gathering system will have throughput capacity of over 600 million cubic feet per day (MMcf/d) and is supported by long-term acreage dedications from Plains Exploration & Production (for itself and as agent for its co-owner) and Delta Petroleum (Delta), and a long-term dedication from a subsidiary of Enterprise Products Partners L.P. (Enterprise) covering gas it has the right to gather from a specified, dedicated area within the Piceance Basin. PXP CV Pipeline, LLC (a 50% subsidiary of PXP) and Delta own 25 percent and 5 percent of CVGG, respectively.
"We are excited about the opportunity to expand our gathering presence in the Piceance Basin to accommodate recent increases in drilling as well as the long-term production plans of our producer customers," said Mark Borer, president and CEO of the Partnership. "This expansion, which we first announced earlier this month, provides critical midstream infrastructure to serve the needs of Collbran Valley producers and a platform for our continued growth in the Piceance."
CVGG will invest approximately $100 million in 2008-2009 to achieve throughput capacity of approximately 300 MMcf/d by the second quarter of 2009. The remaining investment in primarily compression equipment of approximately $50 million will be spent in 2010-2013 as production volumes increase, providing total throughput capacity in excess of 600 MMcf/d.
The new CVGG gathering pipeline will interconnect with a new gathering pipeline that will be constructed by Enterprise. Upon completion of both the CVGG gathering pipeline and the Enterprise-owned line, natural gas on the CVGG gathering pipeline will be delivered to Enterprise at the interconnect, where it will be gathered into Enterprise's Meeker gas processing facility. As a result of this arrangement, CVGG will decommission processing services at its Anderson Gulch facility in 2009. CVGG will continue to provide treating and compression services at the Anderson Gulch facility.
CVGG will receive gathering and compression fees as compensation for the system expansion under terms ranging from 20 years to life of lease. Through 2016, CVGG will continue to receive existing processing fees from its shippers on a maximum volume of 190 MMcf/d. Current processing capacity at Anderson Gulch is 120 MMcf/d. CVGG will also benefit from reduced operating expenses once the Anderson Gulch facility ceases processing services.
Borer continued, "It's been satisfying to work with our co-owners in CVGG, PXP and Delta, to find a winning expansion proposal to serve their needs for market access and increased product recovery while providing an appealing long-term investment for both CVGG and DCP Midstream Partners' unitholders. This project provides attractive accretion to our unitholders supported by stable, fee-based contracts with long-term dedications."
The Partnership plans to fund its portion of the expansion cost with debt under its bank credit facility.
DCP Midstream Partners, LP is a midstream master limited partnership that gathers, processes, transports and markets natural gas, transports and markets natural gas liquids, and is a leading wholesale distributor of propane. DCP Midstream Partners, LP is managed by its general partner, DCP Midstream GP, LLC, which is wholly owned by DCP Midstream, LLC, a joint venture between Spectra Energy and ConocoPhillips.
This press release may contain or incorporate by reference forward-looking statements as defined under the federal securities laws regarding DCP Midstream Partners, LP, including projections, estimates, forecasts, plans and objectives. Although management believes that expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to be correct. In addition, these statements are subject to certain risks, uncertainties and other assumptions that are difficult to predict and may be beyond our control. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, the Partnership's actual results may vary materially from what management anticipated, estimated, projected or expected. Among the key risk factors that may have a direct bearing on the Partnership's results of operations and financial condition are:
-- the level and success of natural gas drilling around our assets and our ability to connect supplies to our gathering and processing systems in light of competition; -- our ability to grow through acquisitions, asset contributions from our parents, or organic growth projects, and the successful integration and future performance of such assets; -- our ability to access the debt and equity markets; -- fluctuations in oil, natural gas, propane and other NGL prices; our ability to purchase propane from our principal suppliers for our wholesale propane logistics business; and -- the credit worthiness of counterparties to our transactions.
Investors are encouraged to closely consider the disclosures and risk factors contained in the Partnership's annual and quarterly reports filed from time to time with the Securities and Exchange Commission. The Partnership undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Information contained in this press release is unaudited, and is subject to change.
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DCP Midstream Partners, LP
CONTACT: Media And Investor Relations, Karen L. Taylor of DCP MidstreamPartners, LP, +1-303-633-2913, 24-Hour, +1-303-809-9160
Web site: http://www.dcppartners.com/