- The Spraberry field produces oil and associated liquids-rich gas. The gas includes NGLs, which are separated at the Midkiff/Benedum and Sale Ranch gas processing facilities in West Texas. These NGLs are then transported to third-party fractionation facilities at Mont Belvieu. During May, a significant third-party facility was shut down for planned maintenance. When it came back on line in late May, it had operating problems and was not able to achieve its pre-shutdown fractionation capacity. As a result of this problem and tight fractionation capacity across the Mont Belvieu complex, Pioneer Southwest built an NGL inventory of 28 thousand barrels that could not be processed for sale in June, thereby negatively impacting production for the second quarter by approximately 310 BOEPD. Within the next month, the fractionation facility is expected to increase processing rates to its pre-shutdown processing capacity, thereby allowing Pioneer Southwest’s NGL inventory and ongoing production to be fractionated and sold over the remainder of 2012. Based on the Partnership’s second quarter NGL price realization per barrel, the NGL inventory has a sales value of approximately $850 thousand.
- The Midkiff/Benedum gas processing plants were also forced to reject ethane into the residue gas stream during the second quarter as a result of tight NGL fractionation capacity at Mont Belvieu. The net impact of rejecting ethane was primarily a loss in production of approximately 220 BOEPD. Ethane rejection continues and is expected to impact Pioneer Southwest’s production over the remainder of 2012 based on the outlook for continuing tight fractionation capacity at Mont Belvieu. Due to low ethane prices, there is not a significant economic impact associated with rejecting ethane versus selling it. Pioneer Southwest estimates that its revenues are lower as a result of rejecting ethane by approximately $2 thousand per day at current gas and NGL prices.
Pioneer Southwest Energy Partners L.P. Reports Second Quarter 2012 Financial And Operating Results
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