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Hess Midstream Partners and Targa Resources announce joint venture

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Hydrocarbon Engineering,

Hess Midstream Partners LP has announced the formation of a 50/50 joint venture (JV) with Targa Resources Corp. to construct a new 200 million ft3/d gas processing plant.

The new gas plant, called Little Missouri Four (LM4), will be located at Targa’s existing Little Missouri facility, south of the Missouri River in McKenzie County, North Dakota, US.

Targa will manage the construction of LM4 and will operate the plant. Hess Midstream’s 50% interest in the JV will be held through Hess TGP Operations LP, in which Hess Midstream owns a 20% controlling economic interest, and Hess Infrastructure Partners LP (HIP) owns the remaining 80% economic interest. LM4 is expected to be completed in 4Q18.

John Gatling, Chief Operating Officer of Hess Midstream, said: “The LM4 gas processing plant demonstrates our commitment to executing our strategy by providing additional Bakken basin processing capacity, which provides another layer of organic growth to meet our long-term targeted annual distribution per unit growth. By executing infrastructure projects that provide more optionality to producers, Hess Midstream expects to continue to capture additional Hess and third-party volumes, reinforcing the competitive advantage we enjoy from our strategically located infrastructure in the core of the Bakken."

Doug Burgum, Governor of North Dakota, said: “We are thrilled to welcome Hess’ significant investment, which underscores the company’s longstanding presence in North Dakota and commitment to our state. This processing plant will provide much-needed capacity at a time when North Dakota’s oil production nears record levels and associated natural gas production continues to climb. It’s a huge step in the right direction toward continuing to meet our flaring reduction goals and encouraging responsible energy development and infrastructure investment.”

Jonathan Stein, Hess Midstream’s Chief Financial Officer, said: “The JV with Targa and related investments are expected to be fully integrated into our existing contract structure. This reinforces the competitive advantage we have through our long-term contracts with Hess Corp, which are 100% fee-based and designed to deliver stable and growing cash flows while providing downside protection. This strategic investment is expected to continue to enhance Hess Midstream’s organic growth trajectory with limited use of our balance sheet, while further increasing our dropdown timing flexibility.”

Construction costs for LM4 are anticipated to be approximately US$150 million (gross to the JV), with US$15 million attributable to Hess Midstream (US$60 million funded by HIP). In addition, Hess Midstream and HIP will also invest approximately US$100 million gross, US$20 million attributable to Hess Midstream, for new pipeline infrastructure to gather volumes to the LM4 plant.

With these investments, Hess Midstream will have total processing capacity of 350 million ft3/d of gas in the Bakken, with export optionality north and south of the Missouri river.

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Downstream news Downstream contract news North America downstream news