July 17, 2017

Tallgrass closes Powder River Gathering deal

Tallgrass Energy Partners LP, through its subsidiary Tallgrass Midstream LLC (TMID), has closed on the acquisition of DCP Midstream's Douglas natural gas gathering system in the Powder River Basin for cash consideration of approximately $128 million, subject to potential adjustments specified in the purchase agreement.

Evolution Midstream to acquire Rowdy Gas Gathering System in Powder River Basin

Evolution Midstream LLC has entered into a binding agreement to purchase the Rowdy Gas Gathering System from Lucid Energy Group. The Rowdy system is located in Wyoming's Powder River Basin and serves oil and gas producers in Campbell, Converse, and Johnson counties. The Rowdy system is comprised of approximately 1,000 miles of gas gathering lines and 43,700 horsepower of compression. The transaction is expected to close by July 1, 2017.

The extensive footprint of the acquired assets, located in the heart of the Powder River Basin, provides the foundation for additional growth opportunities. Evolution plans to embark on an extensive capital program to increase system capacity and reach, offering producers of all sizes a comprehensive gas gathering and processing solution, as well as crude gathering services.

Evolution was advised by Buchanan Ingersoll & Rooney PC. Lucid was represented by Vinson & Elkins LLP. Jefferies LLC served as Lucid's exclusive financial adviser.

TPG Growth to acquire Discovery Midstream

TPG Growth, the middle market and growth equity platform of global alternative asset firm TPG, has entered into a definitive agreement to acquire Discovery Midstream, a Dallas-based provider of oil and natural gas gathering and natural gas processing services in the southern portion of Colorado's Denver-Julesburg Basin. Discovery's current management team will continue to run the company post-transaction and is investing alongside TPG Growth in this transaction. Additional terms of the transaction were not disclosed.

Discovery's assets are strategically located in Weld and Adams counties. The company is currently constructing more than 120 miles of pipeline and a 60 MMcf/d natural gas processing plant, which is expected to come online in the third quarter of 2017. The company plans to expand the plant capacity to 260 MMcf/d in 2018.

The transaction is expected to close in the third quarter of 2017. TPG Growth's legal advisor for the transaction is Vinson & Elkins LLP. Discovery's financial advisor for the transaction is Evercore, and its legal advisor is Weil, Gotshal & Manges LLP.

Tallgrass Energy plans new terminal in COlorado oil complex

Tallgrass Energy Partners LP, through its subsidiaries Tallgrass Terminals LLC and Tallgrass Pony Express Pipeline LLC, have reached an agreement with Saddle Butte Pipeline to develop the Tallgrass Grasslands Terminal. The terminal will be located strategically in the heart of the Platteville, Colo., oil terminal complex and will interconnect with Saddle Butte's Denver-Julesburg Basin crude oil gathering system.

Pending the successful conclusion of the Pony Express Pipeline open season, the Tallgrass Grasslands Terminal will serve as a new pipeline origin for the Pony Express Platteville Extension. The Platteville Extension is expected to have an ultimate takeaway capacity of at least 80,000 barrels of crude oil per day and is expected to be in service Q2 2018.

Saddle Butte's Milton Terminal also will serve as an origin point on Pony Express, allowing Pony Express to offer direct refinery and Cushing terminal connections to Saddle Butte's producer customers in the near term while the Tallgrass Grasslands Terminal is developed. The Milton Terminal will continue as an origin point when the terminal is operational. Tallgrass Terminals will wholly own and operate the Tallgrass Grasslands Terminal when it is completed. Consistent with the Pony Express Pipeline's current operations, the Tallgrass Grasslands Terminal will offer batching service for several common streams sourced from multiple gathering system interconnects.

Cheniere reaches regulatory, financial milestones on Midship Pipeline Project

Cheniere Energy Inc. has reached regulatory and financial milestones related to the development of its previously announced 200-mile 36-inch interstate natural gas pipeline project (the Midship Project).

Midship Pipeline Company LLC filed an application for a Certificate of Public Convenience and Necessity with the Federal Energy Regulatory Commission (FERC) with respect to the Midship Project. Midship currently targets receipt of FERC authorization in early 2018 and in-service of the Midship Project in late 2018 or early 2019.

In addition to filing the FERC application, Midship Holdings LLC has entered into agreements with investment funds managed by EIG Global Energy Partners under which EIG-managed funds have committed to make an investment of up to $500 million in the Midship Project, subject to the terms and conditions contained in the applicable agreements. Subject to Midship Holdings making a positive Final Investment Decision with respect to the Midship Project, the EIG Investment, and equity contributed by Cheniere, is intended to ensure that the project has the equity funding expected to be required to develop and construct up to the full project design of 1,440,000 Dekatherms per day of throughput capacity. Credit Suisse acted as exclusive financial advisor to Cheniere on the EIG Investment.

The Midship Project is being developed to create pipeline capacity of up to 1,440,000 Dekatherms per day of firm transportation to connect production from the STACK and SCOOP resource plays in the Anadarko Basin in Oklahoma to Gulf Coast and Southeast markets. As previously disclosed, Midship has secured commitments from subsidiaries and/or affiliates of Cheniere, Devon Energy, Marathon Oil, and Gulfport Energy to support initial construction of approximately 1,000,000 Dekatherms per day of capacity.

Midship Holdings would require acceptable financing arrangements, which may include project financings and offerings by it or its subsidiaries of debt or equity, and regulatory and other approvals before the proposed project begins construction.

Crestwood completes initial build-out of Nautilus Gas Gathering System in Delaware Basin

Crestwood Equity Partners LP has completed the initial build-out of the Nautilus gas gathering system in the Delaware Basin. The system has been placed into service with first flow occurring on Friday, June 2, 2017. The initial build-out includes 20 receipt point meters, 60 miles of pipeline, a 24-mile-high pressure header system, 10,800 horsepower of compression and a high pressure delivery point. The Nautilus gas gathering system is owned by Crestwood Permian Basin Holdings LLC, a Crestwood and First Reserve joint venture focused on developing, owning and operating midstream infrastructure in the Delaware Basin.

In September 2016, Crestwood entered into a long-term agreement with SWEPI LP, a subsidiary of Royal Dutch Shell plc, to construct, own and operate a natural gas gathering system in Shell's operating position in the Delaware Basin. The Nautilus system is designed for gas gathering in an area of dedication of approximately 100,000 acres across Loving, Reeves and Ward counties, Texas. The system will ultimately include 194 miles of low pressure gathering lines, 36 miles of high pressure trunk lines and centralized compression facilities which are expandable over time as production increases, providing gas gathering capacity of no less than 250 million cubic feet per day.

WhiteWater Midstream gains new commitments and strategic partner

WhiteWater Midstream recently completed an agreement with WPX Energy, which provides WPX with 300,000 MMBtu/d of natural gas transportation capacity from the Stateline area to Waha and grants WPX a 10% ownership interest in Agua Blanca. As part of the agreement, WPX has the right to increase its capacity to 500,000 MMBtu/d and its ownership up to 20%. Construction of Agua Blanca remains on schedule with the initial commissioning of the project expected during the fourth quarter of 2017 and the complete path from Orla to Waha operational by the end of the first quarter of 2018. Agua Blanca will initially consist of 75 miles of 36" diameter pipe with a capacity of 1.25 Bcf/d, expandable to 1.75 Bcf/d with minimal capex. The project is supported by substantial long-term, firm volume commitments. The initial path of Agua Blanca will be from Orla, Texas to the Waha Hub, servicing portions of Culberson, Loving, Pecos, Reeves and Ward counties. Agua Blanca will have multiple direct downstream connections including to the Trans-Pecos Header.

WBI Energy to expand natural gas transportation infrastructure in North Dakota

WBI Energy Inc., a subsidiary of MDU Resources Group Inc., plans to expand its Line Section 27 natural gas transportation system in the Bakken producing area in northwestern North Dakota.

The $27 million to $30 million expansion project will involve construction of approximately 13 miles of 24-inch diameter pipeline and associated facilities. When the expansion is complete, the transportation capacity on WBI Energy's Line Section 27 will be over 600,000 dekatherms per day. The targeted in-service date for the project is fall 2018, which is the same timeframe for completion as WBI Energy's $55 million to $60 million Valley Expansion project near Fargo, North Dakota.

LNG market plagued by surplus capacity

An ESAI Energy report notes that LNG liquefaction production has grown dramatically over the past ten years and LNG demand growth has become stagnant in many markets. Spot LNG prices have collapsed to the lowest levels in 20 years, and some buyers secured too much LNG supply without firm customers.

Surplus cargoes will soon flood the market as new projects start up in 2017-2018, and final investment decisions for many new liquefaction projects have been delayed or cancelled.

Elisabeth Murphy, analyst at ESAI Energy, points out that "The LNG market will eliminate its surplus capacity around 2024. By 2025, the next wave of LNG liquefaction will be needed as demand catches up and then exceeds supply."