MPLX LP management said its 2024 growth outlook is anchored in the Permian Basin and Marcellus Shale, which provide steady sources of opportunities, particularly around natural gas and natural gas liquids (NGL) assets. It also sees potential in the Utica Shale.
“We plan to continue growing these operations through organic projects, investment in our Permian joint ventures and fold-on opportunities,” said CEO Mike Hennigan.
The United States is a low-cost producer of energy fuels needed globally. “We expect strong demand for hydrocarbons will support growth across our asset footprint,” Hennigan said.
To be sure, U.S. benchmark Henry Hub prices have averaged around $2.530/MMBtu over the past year, well off highs near $10.000 in the summer of 2022, according to NGI’s Daily Historical Data.
Findlay, OH-based MPLX set a capital spending budget of $1.1 billion for 2024, which includes allocations of $950 million for growth and $150 million for maintenance on natural gas, crude and NGL projects, mainly in the two large basins.
In the logistics and storage (L&S) unit, construction is progressing on the Whistler Pipeline extension. MPLX expects to complete the 43-mile, 42-inch-diameter ADCC Pipeline lateral from the Agua Dulce hub in South Texas to Corpus Christi LNG in the third quarter. Cheniere Energy Inc., which has a 30% stake in the pipeline, sanctioned the third stage of the Corpus liquefied natural gas export project in the summer of 2022.
MPLX also is progressing with the expansion of the Bangl joint venture (JV) NGL pipeline to about 200,000 b/d. The expansion supports the growing demand for NGL takeaways from the Permian’s Delaware and Midland sub-basins to the fractionation hub in Sweeney, TX. The project is expected to be in service in the first half of 2025.
In the gathering and processing (G&P) segment, “we are bringing new gas processing plants online to meet increasing customer demand,” Hennigan said.
In the Delaware, MPLX is progressing with construction of its Preakness II natural gas processing plant, with an online target early in the second quarter. The midstreamer also is planning to build Secretariat, its seventh processing plant in the basin, which is expected to come in-service in the second half of 2025.
Once operational, MPLX’s total processing capacity in the Delaware would be about 1.4 Bcf/d, Hennigan said.
In the Marcellus, MPLX is advancing the construction of the 200 MMcf/d Harmon Creek II gas processing plant. The project is slated to begin operation at the end of the first quarter.
Debottlenecking Opportunities
MPLX plans to spend the remaining capital outside the strategic basins on smaller projects targeted at “expansion or the bottlenecking of existing assets and projects related to expected increased producer activity,” Hennigan said.
MPLX also plans to evaluate low-carbon opportunities, with the focus remaining on its L&S and G&P footprint.
On production, MPLX said wells with longer laterals in the Marcellus and Utica resulted in higher volumes on its systems in the fourth quarter of 2023.
In the Marcellus, where it has the largest footprint, process utilization reached 96%, and producer drilling activity should support continued volume growth, according to Hennigan. MPLX saw similar growth rates in Utica, with processing utilization 10% higher year/year.
In the Permian, producers drilling and completion activities support continued associated gas production growth. In support of the opportunities, MPLX acquired the remaining interest in a G&P JV in the Delaware basin for about $270 million, Hennigan said.
MPLX continues to evaluate and analyze additional expansion projects or new projects in the Permian and sees potential in the Marcellus and Utica.
“Aside from the Permian growth, which gets a lot of attention, I think the Marcellus and also Utica…Utica was an area that probably was a little less thought of recently, but it’s also starting to go into a growth mode as well,” Hennigan said.
MPLX continues to look at organic growth. “One thing I want to make clear is growth through mergers and acquisitions (M&A) for us isn’t just back to buying assets...
“We feel we have a lot of high-return organic projects to utilize our capital versus some step-out M&A opportunities that we’ve evaluated up to this point,” Hennigan said.
MPLX reported net income of $1.1 billion ($1.10/share) for the fourth quarter of 2023, up from $816 million (78 cents/share) in the same quarter the previous year. The full-year net income reached $3.80 billion, slightly below the $3.75 billion reported in 2022.
