Permian basin crude oil producers pushing to expand takeaway capacity as a means of bolstering regional crude prices have found willing partners in midstream operators seeking to outdo one another to provide not just new capacity but increased optionality. This article details some of the larger projects designed to move growing Permian crude production to transmission lines.
Oryx Midstream is building 680 miles of crude gathering and transportation pipeline and 910,000 bbl storage, to become operational mid-2019 supporting Delaware basin production. The company already operates 500 miles of transportation and gathering lines in Crane, Midland, Reeves, Pecos, Upton, Ward, and Winkler Counties, Tex., and Lea and Eddy Counties, NM, contracted with 20 producers providing about 900,000 dedicated acres (Fig. 1). Oryx’s delivery capacity is 650,000 b/d, expected to increase to 900,000 b/d by early 2020.
Oryx Midstream Services II LLC operating subsidiary Oryx Delaware Oil Transport LLC (ODOT) in April 2019 launched a binding open season to support proposed construction and development of new crude oil transportation serving the Delaware basin in Texas and New Mexico. The open season sought to gauge shipper interest on one or both of two new routes:
• From ODOT Crane terminal near Crane, Tex., to an interconnection with Gray Oak pipeline, also near Crane.
• From ODOT Midland terminal near Midland, Tex., to Plains All American LP’s Midland South Station, also near Midland.
The open season followed Oryx earlier in the month selling substantially all of its Delaware assets to Stonepeak Infrastructure Partners for about $3.6 billion.
Frontier Energy Services and Concho Resources Inc. have partnered on the Beta Crude Connector (BCC), providing crude oil gathering and transportation in the Midland basin across Martin, Midland, and Andrews Counties, Tex. BCC will consist of about 100 miles of pipeline, a truck offload station, and 250,000 bbl of storage. The pipeline will deliver about 150,000 b/d to local refineries and downstream pipelines starting mid-2019.
BCC follows Frontier’s 2015 construction of the Alpha Crude Connector, also a 50:50 jv with Concho. Alpha serves the Northern Delaware basin with more than 500 miles of pipe and 320,000 bbl of storage. It connects with Enterprise, Plains All American (PAA), and Sunoco pipelines as well as Western Refining and Holly Frontier refineries, and the Genesis rail terminal at Wink, Tex. Alpha’s 150,000 b/d capacity is expandable to more than 500,000 b/d. PAA bought the system in January 2017.
San Mateo Midstream in December 2018 completed its Rustler Breaks pipeline system in Eddy County, NM. Rustler Breaks includes 17 miles of 10-in. OD crude oil gathering pipeline interconnecting with Plains Pipeline LP’s transmission system.
San Mateo was already providing gathering services in neighboring Loving County, Tex. The company’s first-quarter 2019 gathering rate was 25,000 b/d: 16,000 b/d in Eddy County and 9,000 b/d in Loving.
San Mateo and Plains have agreed to work together through a joint tariff agreement to offer Delaware basin producers within a 400,000-acre area of Eddy County crude transportation to Midland. Rustler Breaks’ anchor shipper is Matador Resources Co., joint venture partner with Five Point Capital in San Mateo.
Medallion Midstream companies Medallion Delaware Express and Medallion Pipeline held an open season April 2019 to solicit binding, long-term commitments for expansion of the Delaware Express and Medallion pipeline systems for an expanded joint tariff service. Through the joint tariff service, shippers would receive integrated transportation of Delaware basin crude oil to multiple market centers and long-haul pipelines connected to the Medallion pipeline system.
Assuming sufficient interest, Delaware Express will build new gathering lines to connect production in Reeves County, Tex., with both systems, expanding mainline capacity accordingly.
The existing Delaware Express system aggregates crude on two discrete gathering systems in Reeves, Pecos, and Ward counties in the southern Delaware basin and transports it on a 61-mile, 16-in. OD mainline to interconnections with downstream pipelines, including Medallion. Delaware Express also accepts crude oil delivered by truck at its Independence Station and Eagle Eye Station. An affiliate of Delaware Express owns storage tank and truck unloading facilities at these stations.
The existing Medallion pipeline is a network of about 800 miles of 6-in. OD and larger crude oil pipeline in the Midland basin. Through the joint tariff service, Medallion receives crude oil from Delaware Express at the interconnection between Delaware Express and Medallion near Medallion’s Crane Hub (Fig. 2). Medallion delivers crude oil transported under the joint tariff to the Crane Hub, the Midland Hub and the Colorado City Hub, which provide access to multiple pipelines serving downstream markets.
Delek US is developing its Big Spring gathering system, supported by more than 200,000 dedicated acres producing 207,000 b/d. The 200-mile system will have an initial capacity of 300,000 b/d, loading from receipt points in Howard, Borden, Martin, and Midland Counties, Tex. Big Spring will have terminal storage of 650,000 bbl and connect to Delek US’s Big Spring, Tex., terminal.
Delek spent roughly $79 million on Big Spring in 2018 and expects to spend about $131 million in 2019, adding both production areas and producers. It is exploring potential options for building a joint-venture long haul crude oil pipeline, supplied by Big Spring, to East Houston and Nederland, Tex.
Howard Energy Partners (HEP) in May 2019 completed construction of most of its Delaware basin crude oil gathering infrastructure. HEP’s Delaware basin assets are part of its Catalyst Midstream joint venture with WPX Energy, operated by HEP and supported by more than 600 square miles in Lea and Eddy Counties, NM, and Reeves and Loving Counties, Tex.
HEP built more than 50 miles of crude oil gathering pipelines with 100,000 b/d of capacity and an associated 50,000-barrel crude oil terminal in Reeves County. The system will include about 80 miles of pipeline at full build-out. HEP has entered into a commitment to support a significant Delaware basin producer that will further expand HEP’s crude oil gathering to accommodate the dedication of more than 10,000 additional gross acres.
The accompanying table shows permits for crude gathering pipelines filed so far in 2019 with the Texas Railroad Commission.
