Pipeline takeaway capacity in the Bakken and Powder River basins has been tighter than a thick rubber band for producers there experiencing record volumes of supplies. Unlike the Permian, new builds and expansions of midstream infrastructure have been agonizingly slow to catch up with record production, resulting in over-the-limit gas flaring and pricey crude transportation by rail car. Which is exactly why Houston-based Crestwood Equity Partners is all eyes, arms and legs to bring more connections to two of the most prolific basins in the nation.
Crestwood Equity Partners
Crestwood Equity Partners LP is a publicly traded master limited partnership that owns and operates midstream assets located primarily in the Bakken Shale, Delaware Basin, Powder River Basin, Marcellus Shale, Barnett Shale and Fayetteville Shale.
The Bakken Keeps Talkin’
In an area where oil production is expected to top 1.5 MBPD by 2021 and associated gas production continues to climb at twice the rate of crude, the Bakken has been starved of gathering lines to transport supplies to market. The EIA projects oil production this month to hit or surpass more than 1.3 MMBPD and 1.4 MMBPD by March, with natural gas production rising 42 MMCFPD month over month. Might want to scratch that 1.5 MBPD prediction for now.
Crestwood early recognized the hamstrings affecting producers by building its Arrow system in Watford City, N.D., which includes gathering and transporting crude oil and water; and gathering, processing and transporting gas across 150,000 acres. The company also began operations last year at its Bear Den II processing plant, a 120 MMCFPD facility located adjacent to its 30 MMCFD Bear I. Crestwood is planning two additional pipelines in the Bakken slated for service in 2021.
Cry Me a Powder River
With full pipeline capacity reached nearly a year ago, the Powder River also has experienced its share of production growing pains. Here, Crestwood focuses exclusively on gas, adding gathering lines to connect wells to the company’s two processing plants. As it happens, 2019 proved to be a pivotal year for Crestwood when the company broke off its romance with JV partner Tulsa-based Williams and snatched up the remaining 50% ownership of the Jackalope natural gas system for $484.6 million. The two midstreamers had planned to increase processing capacity on the Jackalope and build a second plant on the Bucking Horse gas plant in Wyo. Ah, such is love ever so fleeting.
With ownership and operation now under one hardhat, Crestwood began operations of Bucking Horse II this month, increasing total capacity to 345 MMCFD in the Powder River. The company also announced this week a most impressive Q4 earnings report that sets the stage for more free cash flow in 2020 as demand continues to ramp up for additional gathering lines and processing in both basins.
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