Targa Resources and Sanchez Energy form $240m JV to construct natural gas plant in US

Oil and gas companies Targa Resources Partners (TRP) and Sanchez Energy have formed a $240m joint venture (JV) to construct a natural gas liquids processing plant and pipelines in the US.

Under the JV, the companies will build a new 200 million cubic feet per day (MMcf/d) cryogenic natural gas processing plant in La Salle County, Texas and about 45 miles of associated pipelines that will connect Sanchez’s Catarina gathering system to the plant.

According to Sanchez Energy, the JV will be a 50-50 split between the two companies.

TRP will contribute $125m of growth capex related to the JVs and the exploration and production arm of Sanchez Oil & Gas would provide $115m.

TRP is expected to have a 50% ownership interest in the plant and the high pressure gathering pipelines.

Targa said it will hold all the transportation capacity on the pipeline.

The La Salle County plant is set to accommodate the growing production from Sanchez’s Eagle Ford Shale acreage position in Dimmit, La Salle and Webb Counties, Texas as well as from other third party producers.

Construction and operations of the plant and high pressure gathering lines would be managed by TRP.

The new plant is expected to begin operations in early 2017 and before it is placed in service, TRP will benefit from Sanchez Energy natural gas volumes that will be processed at the company’s Silver Oak facilities located in Bee County, Texas.

TRP chief executive officer Joe Bob Perkins said: "Improving Targa’s presence and performance in the Eagle Ford has been a focus since we completed our acquisition and entered the area earlier this year.

"The joint venture with Sanchez Energy aligns producer and midstream interests, providing Targa with a strategic plant on the west side of our system supported by a significant acreage dedication and a long-term, fee-based contract with a very successful producer."