Tallgrass Energy LP and Kinder Morgan Inc. will jointly develop a solution to increase existing crude oil takeaway capacity in the Powder River and Denver-Julesburg basins and to add incremental capacity to the Williston basin and portions of Western Canada.
The proposed venture would include existing and newly constructed assets. Tallgrass would contribute its Pony Express pipeline system and Kinder Morgan would contribute portions of its Wyoming Intrastate Co. and Cheyenne Plains Gas Pipeline and begin the process of abandonment and conversion to crude oil service. In addition, some 200 miles of new pipeline would be constructed to provide crude oil deliveries into Cushing, Okla.
In total, the combined pipeline system is expected to be capable of delivering up to 800,000 b/d of light crude oil and 150,000 b/d of heavy crude oil from points in Wyoming and Colorado to Tallgrass’ and Kinder Morgan’s Deeprock terminal in Cushing with connectivity to the Gulf Coast and export markets through Tallgrass’ planned Seahorse Pipeline and other existing or proposed future projects. The combined project is expected to provide initial service as early as second-half 2020.
“There are a number of competitive advantages to jointly developing this project and leveraging…existing assets, including the expansion of our Double H Pipeline system,” said Don Lindley, chief commercial officer for products pipelines at Kinder Morgan. “Chief among them is the ability to quickly and efficiently place an additional 550,000 b/d of crude transportation takeaway capacity in service from the Rockies, which helps domestic producers and offers near-term relief for Canadian producers.”
Completion of the transaction is subject to conditions, including receipt of applicable state and federal regulatory approvals. In conjunction with the agreement, Tallgrass extended its Pony Express expansion and joint tariff open season with Seahorse to Feb. 28.