Hess Midstream, Targa JV to build gas processing plant in US


Hess Midstream Partners has formed a joint venture with Targa Resources to construct a 200 million standard cubic feet per day (MMSCFD) gas processing plant called Little Missouri Four (LM4) in North Dakota, US.

The plant will be built at Targa’s existing Little Missouri facility, south of the Missouri river in McKenzie County, North Dakota.

Targa will manage the construction of LM4 and operate the plant.

Hess Midstream will hold its 50% interest in the joint venture through Hess TGP Operations.

Hess Midstream owns a 20% controlling economic interest in Hess TGP Operations and Hess Infrastructure Partners (HIP) owns the remaining 80%.

LM4 is likely to be completed in the fourth quarter of 2018.

The new plant is expected to cost $150m gross to the joint venture, with $15m to be contributed by Hess Midstream and $60m to be funded by HIP.

Hess Midstream and HIP will also invest $100m gross, $20m attributable to Hess Midstream, for new pipeline infrastructure to gather volumes to the LM4.

With these investments, the total processing capacity of Hess Midstream will be 350 MMSCFD of gas in the Bakken, with export optionality north and south of the Missouri river.

Hess Midstream will retain the option to further expand processing capacity by de-bottlenecking the Tioga Gas Plant in the future. As a result, the earlier planned turnaround at the Tioga Gas Plant in 2019 is expected to be postponed.

Hess Midstream COO John Gatling said: “The Little Missouri Four 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.”

North Dakota Governor Doug Burgum 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.”

Hess Midstream CFO Jonathan Stein said: “The joint venture 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 Corporation, 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.”

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