Sanchez Midstream Partners LP (SMP) and Targa Resources Corp. have merged their respective 50% interests in the entities that own the high-pressure Carnero gathering line and Raptor gas processing facility to form an expanded 50-50 joint venture in South Texas (OGJ Online, Jul. 7, 2017).
The combine has acquired Targa’s 200-MMcfd Silver Oak II gas processing plant in Bee County, Tex., expanding the processing capacity to 460 MMcfd from 260 MMcfd, and owns the full capacity of the Carnero gathering line, which has a design limit (without compression) of 400 MMcfd.
Additional enhancements include dedication of more than 315,000 gross Comanche acres in the western Eagle Ford, operated by Sanchez Energy Corp., under a long-term firm gas gathering and processing agreement. The agreement, approved by all unaffiliated Comanche working interest partners, establishes commercial terms for the gathering of gas on the Carnero gathering line and processing at the Raptor gas processing facility and Silver Oak II. Before this, Comanche volumes were gathered and processed on an interruptible basis, with the processing capabilities of the joint ventures limited by the capacity of the Raptor gas processing facility.
The structure simplified the previous combine with Targa, said Gerry Willinger, chief executive officer of SMP’s general partner, which facilitates greater operating efficiencies and provides a platform for growth of the Carnero JV in South Texas.
By adding Silver Oak II and the additional capacity of the Carnero gathering line to the Carnero JV, the South Texas midstream assets, which include Western Catarina Midstream and the Seco Pipeline, are positioned to capture the increase in volumes from development activity in the western Eagle Ford without spending incremental development dollars, Willinger said.