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There are signs that the pressure is mounting on ETP to do something—anything—to get NGLs moving through the Dragonpipe (Mariner East 2 pipeline). Antero Resources, one of the biggest natural gas fracking companies in the Marcellus shale and potentially a very large ETP customer, is counting on being able to use the Dragonpipe before the end of 2018. That’s what they told analysts in their quarterly conference call on November 1. Antero’s financials for the period through 2022 depend heavily on being able to send 50,000 barrels a day of NGLs through the Dragonpipe at least by January 2019, and far more than that starting about a year from now.

You can listen to the conference using this link: Antero Resources Third Quarter 2018 Earnings Conference. (Registration required.)

The Dragonpipe was mentioned in passing in the introductory statements by management, but most of the interesting information was in the Q&A with analysts, which started about 20 minutes into the call. Three of them were very anxious to get more information on the status and importance of the pipeline. A few of the key exchanges related to the Dragonpipe are below.

The first question had to do with the recent decision by Kinder Morgan, an ETP competitor, to cancel plans to implement an NGL pipeline (potentially competing with the Dragonpipe) out of the Marcellus by reversing an existing pipeline.

Q: [Was the Kinder Morgan cancellation a reflection of the availability of greater NGL pipeline capacity in general or of preference for exports via Mariner]?

A: Mariner East is expandable several times—can really be bulked up—so [its NGL pricing is favorable compared] to Mt. Belvieu [the Texas NGL hub where national pricing is set] and competitive and it’s there, so I think producers are happy to align behind [Mariner East].

Q: So Mariner East 2 will be the key driver for your confidence [in being able to sell NGLs at higher prices through 2022]?

A: Correct. When you look at the international pricing, that really gives you an uplift compared to Mt. Belvieu pricing, so that really drives that realization in pricing over that time period.

Q: And on the Mariner East 2 pipeline, there were some reports on delays…. Could you please update us on the status of the pipeline and, you know, if it it’s going to be brought online in phases?

A: There’s always a danger in commenting on third-party projects, but our understanding is that they’re moving along, that it will be brought on in phases with the smaller amounts with their using some of the repurposed bypasses early on that’s going to allow production of on the order of 150,000 barrels a day, and then once they get it worked out in the next year, then it can expand quite a bit more…. So I think two phases: the early one is in the next few months and then the next one after that is within the next year. But that’s our view from afar. I couldn’t say we know more than the general public.

Q: How should we think about Antero’s [use of] Mariner East 2; is it going to be a gradual ramp-up in pipeline flows on that pipeline?

A: I think we assume that in January 2019 we’ll be flowing our 50,000 barrels a day of propane and butane…. And then, what Energy Transfer has stated is that they plan to have the entire pipeline on by the third quarter of 2019. So those are the assumptions we’re using right now, that we’re able to flow more than 50,000 barrels per day … by the end of 2019, and to essentially flow all of our liquids that we want to on ME2—all of our propane and butane, that is.

These statements by Antero management mean that (a) they are pretty confident “ME2” will be in operation this coming quarter and (b) they will really start feeling the financial consequences early next year if it isn’t. This is one sign that ETP customers are starting to lose their patience.

It is also interesting that ETP is telling customers that the next expansion phase will be in the third quarter of 2019, while at the same time it is telling the public that nothing more will be completed until sometime in 2020.