Midstream News
Isis Energy formed with $150M equity commitment from EnCap Flatrock Midstream
Isis Energy LLC, a new midstream company focused on the transportation, storage and distribution of crude oil and related products, has received a $150 million commitment from EnCap Flatrock Midstream. The Houston-based Isis will use the capital to provide logistics and infrastructure for moving, storing and blending low-gravity crude and other products including residual fuel oil, asphalt and reclaimed products. Isis will serve producers, refiners, traders and other marketers and suppliers by providing rail and waterborne solutions in the United States and Canada.
Isis is led by President A.J. Brass, who has been involved in the refining, transportation, marketing and distribution of crude and petroleum products for more than 20 years, most recently as president of Gulf Coast Asphalt Company LLC. (GCAC), a position he held for the past five years.
In addition to Brass, the management team includes CFO Jason Goldstein; vice president Joe Mattingly Jr.; vice president Kenny Hucker; and vice president and general counsel Dave Hubenak. Brass, Mattingly and Hucker worked together at GCAC in various roles for the past 15 years. After 17 years as an investment banker, Goldstein joined GCAC in 2010 from Blossom Street Capital, where he was a partner. Hubenak joined GCAC in 2012 from Tesco Corp., where he served as deputy general counsel.
Locke Lorde LLP provided legal counsel to Isis Energy. Thompson & Knight LLP served as legal counsel to EnCap Flatrock.
Edward plant to accommodate increasing Permian production
Atlas Pipeline Partners LP plans to construct a new 200 MMCFD cryogenic processing plant to accommodate rapidly increasing Permian production. The new facility, to be known as the Edward plant, will be constructed to have initial capacity of 100 MMcfd, which is expected to be in service in the second half of 2014. As production increases behind the system, placement of additional compression and refrigeration equipment to increase the plant's capacity to 200 MMcfd, will come in service as needed. The Partnership expects cash flows from the Edward expansion to materialize in meaningful amounts throughout 2015 and beyond.
Completion of the full facility will increase processing capacity at the WestTX system from 455 MMcfd to 655 MMcfd, expanding further beyond the 200 MMcfd Driver plant addition that was brought into service in April 2013. The expected cost for the Edward plant itself is estimated to be $100-120 million net to the Partnership, which includes both phases of the expansion of the plant, with the majority of the plant capex being deployed in the 2013-2014 time period. Additionally, future capex will be deployed in the form of expected compression and well connection costs as needed to fully utilize the Edward plant's capacity.
Atlas Pipeline's partner on the WestTX system, Pioneer Natural Resources Inc., which owns a 27.2% interest in the facility, will participate in the projects costs and cash flows and will anchor the production growth behind the expansion, complimented by numerous third party producer customers.
Crestwood Midstream completes acquisition in Niobrara Shale Gas Gathering and Processing JV
Crestwood Niobrara LLC, a subsidiary of Crestwood Midstream Partners LP, has completed the acquisition of a 50% interest in Jackalope Gas Gathering Services LLC from RKI Exploration & Production LLC (RKI) for a total cash consideration of $107.5 million.
The other 50% interest in Jackalope is owned by Access Midstream Partners LP. Access will continue to provide field operations and construction management for Jackalope, and Crestwood will assume the commercial development role for the joint venture.
GE Energy Financial Services provided $80.6 million of preferred equity to Crestwood Niobrara, with the remaining $26.9 million of the acquisition funded under Crestwood's revolving credit facility. GE Energy Financial Services has agreed to provide 75% of the future capital contributions for Crestwood Niobrara's 50% interest in Jackalope, up to an aggregate contribution of $150 million.
The Jackalope gathering and processing system is located in Converse County, Wyoming, in the Powder River Basin Niobrara Shale play and is currently composed of approximately 100 miles of gathering pipelines and 9,400 horsepower of compression equipment. The Jackalope System is being developed to gather and process rich natural gas produced from a 311,000-acre area of dedication from Chesapeake Energy Corp. and RKI. Chesapeake and RKI have collectively accumulated an acreage block in the play spanning over 750,000 acres. The existing assets and future development are supported by a 20-year gathering and processing agreement with Chesapeake and RKI under which Jackalope receives cost-of-service based fees with annual redeterminations that provide for an attractive rate of return on invested capital.
Locke Lord LLP and Sidley Austin LLP acted as legal counsel to Crestwood Niobrara and GE Energy Financial Services, respectively, in connection with the acquisition and financing transactions.
TransCanada: Keystone XL's environmental impact will be minimal
Greenhouse gas emissions from the proposed Keystone XL crude oil pipeline would be minimal, TransCanada Corp., the project's sponsor, reiterated in a letter to the US State Department. The three to seven million tonnes of additional emissions represents 0.06-0.1% of the 2011 national GHG inventory and would have an unmeasurable climate impact, it said.
The July 17 letter was in response to President Barack Obama's statement, in his June 25 climate policy address, that "the net effects of the pipeline's impact on our climate will be absolutely critical in determining whether this project is allowed to go forward."
Referring to Obama's Keystone XL remarks in his climate policy address, Heather Zichal, his deputy assistant for energy and climate change, emphasized on July 18 that the matter is still under DOS review.
"The President certainly did raise the bar and made it clear that climate impacts should be part of that analysis," she continued during a POLITICO Pro Future of Energy breakfast briefing. "Beyond that, I would direct you to [DOS]."
In a letter to Genevieve Walker, DOS's National Environmental Policy Act coordinator, Kristine Delkus, TransCanada's senior vice-president for pipeline law and regulatory affairs, wrote that the diluted bitumen Keystone XL would transport has comparable lifecycle GHG intensities to other heavy crudes, that the decision on a single pipeline's cross-border permit application will not affect development of Alberta's oil sands, and that governments and oil sands producers are working to mitigate GHG emissions further as production grows.
Marlin Midstream Partners launches IPO
Marlin Midstream Partners LP has launched its initial public offering of 6,250,000 common units representing limited partner interests at a price range of $19-$21. The common units are expected to trade on the NASDAQ Global Market under the ticker symbol "FISH." The underwriters of the offering will have a 30-day option to purchase up to an additional 937,500 common units from Marlin to cover over-allotments, if any. The offering represents a 35.1% limited partner interest in Marlin, or a 40.4% limited partner interest if the underwriters exercise in full their option to purchase additional common units.
According to Renaissance Capital, an independent provider of IPO research and IPO investment services, the Houston, TX-based company plans to raise $125 million with the offering. At the midpoint of the proposed range, noted Renaissance Capital, Marlin Midstream Partners LP would command a fully diluted market value of $356 million.
Stifel, Baird and Oppenheimer & Co. are acting as joint book-running managers for the offering. Janney Montgomery Scott, Wunderlich Securities and Societe Generale are acting as senior co-managers for the offering. Ladenburg Thalmann & Co. Inc., Drexel Hamilton, Natixis, Rabo Securities and RB International Markets (USA) are acting as co-managers. Marlin Midstream Partners develops, owns, operates and acquires midstream energy assets. The partnership currently provides natural gas gathering, transportation, treating and processing services, natural gas liquids (NGL) transportation services, and crude-oil transloading services. Its assets include two related natural gas processing facilities in Panola County, Texas; a natural gas processing facility in Tyler County, Texas; two natural gas gathering systems connected to its Panola County processing facilities; two NGL transportation pipelines that connect its Panola County and Tyler County processing facilities to third-party NGL pipelines; and two crude-oil transloading facilities containing five crude-oil transloaders.
Phillips 66 Partners LP prices upsized IPO
Phillips 66 Partners LP, a limited partnership formed by Phillips 66 that owns pipeline and logistics assets, priced its initial public offering of 16,425,000 common units representing limited partner interests at $23.00 per common unit, up from the 15 million shares it originally planned to sell, and raised $378 million. The common units began trading on the NYSE under the ticker symbol "PSXP." At the closing of the offering, the public owns a 22.9% limited partner interest in Phillips 66 Partners, or a 26.3% limited partner interest if the underwriters exercise in full their option to purchase additional common units. Phillips 66, through certain of its subsidiaries, will own the remaining, majority limited partner interest in Phillips 66 Partners, as well as its 2% general partner interest. JP Morgan, Morgan Stanley, BofA Merrill Lynch, Barclays, Credit Suisse, Deutsche Bank Securities, Citigroup and RBC Capital Markets acted as book-running managers for the offering. RBS, DNB Markets, Mitsubishi UFJ Securities, Mizuho Securities and PNC Capital Markets LLC acted as co-managers.
Briefs
Refinery receipts of crude oil by rail, truck, and barge on the rise
The use of rail, truck, and barge to deliver crude oil to refineries has increased, noted the EIA in a recent report.
The Gulf Coast region accounts for the largest increase. Receipts of this type nearly doubled in 2012 as the area is increasingly dependent on rail and truck to move crude production from the Eagle Ford and Permian Basin.
East Coast receipts increased by 18% in 2012 as a number of refiners put in rail facilities to receive discounted crude from the Bakken and other tight oil formations.
Refinery receipts of crude by truck, rail, and barge remain a small percentage of total receipts, but the report shows refineries across the nation received more than 1 MMb/d by rail, truck, and barge in 2012, a 57% increase from 2011.
ENGlobal secures Utica east midstream contract
ENGlobal Corp. has secured a $5 million engineering and procurement support contract from Utica East Ohio Midstream LLC (UEO) for a cryogenic gas processing plant in Leesville in southwestern Carroll County, Ohio.
The Leesville plant will recover NGLs in the liquids-rich Utica shale play.
UEO is a joint venture of M3 Ohio Gathering LLC, Access Midstream Partners LP, and EV Energy Partners LP.
Work is expected to start immediately with project completion anticipated in 2Q14.