MIDSTREAM NEWS
GULFPORT ENERGY, RICE MIDSTREAM FORM OHIO UTICA JV
Continuing its efforts to secure takeaway to move growing gas production out of the northeast, Gulfport Energy Corp. has executed a letter of intent with Rice Midstream Holdings LLC to form a midstream joint venture to develop natural gas gathering and water services assets to support Gulfport's dry gas Utica shale development in eastern Belmont and Monroe counties, Ohio. The JV will be supported by long-term, fee-based service agreements with Gulfport.
Gulfport will own 25% of the JV and Rice will own the remaining 75% of the JV. Rice will be responsible for constructing and operating the JV's assets:
A dry gas gathering system with capacity to gather over 1.8 MMDth/d of natural gas consisting of 165 miles of high- and low-pressure 12-in. to 30-in. gathering pipelines with multiple interconnections to interstate pipelines including Rockies Express, ET Rover, TETCO, and Dominion East Ohio
Approximately 50,000 horsepower of compression for gathering and delivery into various downstream interstate pipelines
A freshwater distribution system designed to deliver fresh water to pads for completion activities
Under the terms of the agreement, Gulfport will dedicate approximately 77,000 leasehold acres, including the acreage recently acquired in its Paloma Partners III LLC and American Energy - Utica LLC transactions. In addition, Gulfport will also contribute to the JV an existing 11-mile gas gathering pipeline and a 350-MDth/d TETCO interconnect, which are both located in Monroe County.
Gulfport and Rice plan to invest $520 million to develop gathering and compression assets and $120 million for water assets within the JV over the next six years.
Analysts at Jefferies view the deal as a "positive across the board" for GPOR. "Not only does this deal solidify GPOR's gathering and takeaway on its previously undedicated dry gas window acreage, but it also allows them to make a few other savvy financial moves. Firstly, having RICE build and pay for 75% of the upfront costs of the facilities saves money for GPOR versus going at it alone, and secondly with a 25% ownership in the assets the company could reap the benefits of any future drop down or sale of the assets which would add significant cash," they said.
UGANDA, TANZANIA, TOTAL, TANZANIA PETROLEUM DEVELOPMENT SIGN EXPORT PIPELINE FRAMEWORK MOU
Government of the Republic of Uganda, the Government of the United Republic of Tanzania, the Tanzanian Petroleum Development Corp. and Total E&P Uganda signed a Memorandum of Understanding on the crude oil pipeline development principles. The MOU also provides for other participants to join in the process of assessing and developing the route option.
The MOU creates a working framework for the potential development of a crude export pipeline from Hoima to Tanga Port of Tanzania.
From left: James Mataragio, managing director TPDC; Ngosi Mwihava, Ag. Permanent Secretary of Tanzania's Ministry of Energy and Minerals; Dr. Kabagambe Kaliisa, Permanent Secretary Ministry of Energy and Mineral Development Uganda; and Adewale Fayemi, General Manager Total E&P Uganda
James Mataragio, the managing director TPDC, said the undertaking, if executed, could open new investment opportunities and create jobs for citizens of both countries.
Government of Uganda signed a Memorandum of Understanding the oil companies licensed in the country for the commercialization of the oil and gas resources, it was agreed that the crude oil discovered in Uganda is commercialized through crude to power, refining and export of crude oil. Uganda is currently working to identify and assess the comparative merits of three pipeline routing options, two via Kenya to Mombasa and Lamu, and one via Tanzania to Tanga. The objective is to select a route to export crude oil from Uganda to the international market that results in the lowest unit transportation cost and constitutes the most viable option for the project.
SANDRIDGE ENERGY ACQUIRES PIÑON GATHERING FROM EIG
SandRidge Energy Inc. has entered into an agreement to acquire Piñon Gathering Co. LLC from EIG Global Energy Partners for $48 million cash and $78 million of its 8.75% senior secured notes due 2020. The Piñon Gathering Co. owns 370 miles of gathering lines supporting the natural gas and carbon-dioxide production from the SandRidge's Piñon field in West Texas. As a result of the transaction, SandRidge will eliminate minimum volume commitment payments of $40 million per year, forecasted to continue until 2021 and additional contractual fees thereafter, as well as secure a strategic asset supporting its West Texas natural gas production. The transaction is anticipated to close in the fourth quarter of 2015.
WILLIAMS PARTNER AFFILIATE TO JOIN PENNANT MIDSTREAM JV
Three Rivers Midstream LLC, an affiliate of Williams Partners LP, has become a member of Pennant Midstream LLC, a joint venture between affiliates of Columbia Midstream Group LLC, an indirect wholly owned subsidiary of Columbia Pipeline Group Inc. (CPG) and Harvest Pipeline Co. The executed agreement nearly triples the acreage dedicated to Pennant to approximately 500,000 acres. Williams Partners' initial ownership investment in Pennant is 5%, and by funding specified, disproportionate investment amounts for future growth projects, Williams Partners can invest directly in the growth of the joint venture. Such funding will potentially increase Williams Partners' Pennant ownership up to 33.33% over a defined investment period.
Pennant owns the Hickory Bend processing plant and related gathering systems in Pennsylvania and Ohio. The $400 million investment includes nearly 41 miles of 12-, 20-, and 24-in. wet gas field-gathering and high-pressure pipeline facilities; the Hickory Bend cryogenic natural gas processing plant in New Middletown, Ohio; a residue pipeline with current deliveries to Dominion East Ohio and Kinder Morgan's Tennessee Gas Pipeline; and a 38-mile NGL pipeline from the Hickory Bend processing plant to Utica East Ohio's Kensington Plant in Columbiana County, Ohio.
SANCHEZ ENTERS SOUTH TEXAS JV
Sanchez Energy Corp. has entered into joint venture agreements with Targa Resources Partners LP to construct a new cryogenic natural gas processing plant and associated high pressure gathering pipelines near Sanchez Energy's Catarina asset in the Eagle Ford Shale. The processing plant, which will be located in La Salle County, Texas, is expected to have initial capacity of 200 million cubic feet per day (MMcf/d) with the ability to increase to 260 MMcf/d. In connection with the joint venture agreements, Sanchez Energy intends to invest approximately $115 million and receive a 50% ownership interest in the plant and the approximately 45 miles of high pressure gathering pipelines that will connect SN's existing Catarina gathering system to the plant. Targa will hold all of the transportation capacity on the pipeline, and the gathering joint venture will receive fees for transportation.
Sanchez Energy has firm capacity for 125,000 Mcf/d of plant processing and associated pipeline capacity for the first five years and has dedicated the Catarina acreage and all production developed during the 15 year term. The company has the option to deliver additional volumes and commit additional acreage.
The natural gas processing plant and gathering pipelines will be designed, built and operated by Targa. The plant is expected to be operational by early 2017.
Following the news, Stifel analysts said the transaction "appears to have strategic merit although the release did not quantify the expected operating cost or realized price improvements," noting that they are maintaining a Hold rating "based on challenging well economics."
NOBLE SUBSIDIARY FILES FOR IPO
A Noble Energy Inc. subsidiary, Noble Midstream Partners LP, has filed a registration statement on Form S-1 with the US SEC ecurities and Exchange Commission (SEC) in connection with its proposed initial public offering of common units representing limited partner interests. Noble Midstream's initial assets will consist of certain Denver-Julesburg Basin crude oil, natural gas, and water-related midstream services.
Noble Midstream intends to apply to list the common units on the NYSE as "NBLX." The number of common units to be offered and the price range for the offering have not been determined. Noble Energy will own the general partner of Noble Midstream, all of its incentive distribution rights and expects to retain a majority of Noble Midstream's limited partner interests. Barclays, Baird, and JP Morgan are acting as book-running managers of the offering.
RANGELAND'S RIO HUB RECEIVES LARGEST FRAC SAND UNIT TRAIN ON RECORD
The largest frac sand unit train shipped to date in North America arrived at Rangeland Energy's RIO Hub near Loving, New Mexico on October 2. The record 150-car unit train carried 16,500 tons of frac sand. The unit train originated in Ottawa, Illinois, and was operated by BNSF Railway, which transferred service of the train in Clovis, New Mexico, to its railway partner, Southwestern Railroad Inc., for direct delivery. The unit train was unloaded within 22 hours and the sand was stored at the RIO Hub.
KMI, BP FORM JV TO PURCHASE US TERMINALS FROM BP
Kinder Morgan Inc. has finalized agreements with BP Products North America Inc. to acquire 15 refined products terminals and associated infrastructure in the US in a transaction valued at approximately $350 million. Kinder Morgan and BP will form a JV limited liability company terminal business to own 14 of the acquired assets, which Kinder Morgan will operate and market on the JV's behalf. One terminal will be owned solely by KMI.
The terminals, with nearly 9.5 million barrels of storage, are pipeline-connected to refining and processing centers across the US and offer truck, vessel, and barge access and terminal service capabilities. BP will enter into commercial agreements securing long-term storage and throughput capacity from the JV, which plans to market additional capacity to third-party customers.
Kinder Morgan will own a 75% interest in the JV, with BP owning the balance.