Crosstex Builds ‘Transformational’ Cajun-Sibon Pipeline

By Michael Reed, Contributing Editor | November 2013, Vol. 68 No. 11

Robust environment
The project is backed by a 10-year ethane and propane sales agreement with Dow Hydrocarbons and a five-year ethane sales agreement with Williams Olefins, LLC. At full capacity, Cajun-Sibon is expected to contribute $115-130 million of stable-fee based cash flow.

“In Louisiana, our assets are perfectly positioned to take advantage of this robust energy environment by linking supply with growing demand,” Davis said. “We are a major player in that market.”

In the past, the state’s petrochemical market has depended on Gulf of Mexico gas and NGL production, which in recent years has declined from about 12 Bcf/d to 4 Bcf/d. That same market uses up to 300,000 bpd of ethane while Louisiana produces less than 100,000 bpd.

During the past five years, domestic crude production has grown 40 percent, natural gas production has grown over 20 percent and NGL production has grown 30 percent. This increase in supplies is driving demand for liquids used by the petrochemical industry. There are 10 cracking plants in Louisiana, accounting for about 26 percent of U.S. ethylene capacity..

With significant infrastructure being added to the upper Texas and Louisiana Gulf Coasts and the growing significance of Mont Belvieu as a market center, the Dallas-based company looks to take advantage of these industry trends by connecting the ample supply of NGLs found in Texas with the Louisiana refining and petrochemical markets.

“Our customers rely on us to make up the difference in this supply,” said Davis, who holds a bachelor’s degree in finance from Texas Christian University. “Our Cajun-Sibon expansion project is built to meet a portion of the current shortfall, and we believe increasing market demand will lead to additional growth opportunities from our expanded platform.”

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HDD, weather
As with any large project, Crosstex had a lot of variables to consider in putting together the logistics and timeframe for the project, not the least of which was the weather, as January proved to be one of the rainiest months of the last 50 years in the area. Needless to say, the precipitation slowed progress.

“In order to continue construction during these weather conditions, extensive use of construction mats were required in Texas and Louisiana,” Davis said, of 22 rain days the crews experienced. “We have also found that the soil in the Texas region of the project did not have the integrity we were hoping it would, which resulted in delays and additional cost in laying extra mats for the heavy equipment working on the right of way.”