Joint Ventures Ramp Up Activity

Joint Ventures Ramp Up Activity

​Good news from the nation’s midstream sector is a welcome respite in this uncertain time, and joint ventures between operators who offer individual strengths and share common growth strategies just make sense, maybe now more than ever. Here’s a shoutout to the JVs currently making some positive noise in the midstream space.

Open Season for San Mateo’s Pipeline Expansion Project

Formed in 2017, Dallas-based San Mateo Midstream is a joint venture between subsidiaries of Matador Resources and Five Point Energy. The JV now has announced a binding open season beginning August 7 on a proposed 19-mile expansion of the 19-mile San Mateo Black River oil pipeline system in Eddy County, N.M. The project will expand the system further north in Eddy with startup operations expected this Fall. San Mateo’s open season will conclude September 6. San Mateo owns and operates crude oil, natural gas, and water gathering and transportation systems in Eddy County and Loving County, Texas, including the Black River Processing Plant in Eddy with an inlet capacity of 260 MMCFD.

WhiteWater, MPLX, and West Texas Gas Join Forces

Back in Austin, WhiteWater Midstream, Marathon’s MPLX, and West Texas Gas (WTG) have formed a new joint venture to provide NGLs takeaway capacity from two gas processing plants in the Permian to the NGL fractionation hub in Sweeny, Texas. The processing facilities are owned by MPLX and WTG. The project will leverage existing infrastructure with limited initial construction and is supported by top-tier Permian producers. The JV also has entered into an agreement to purchase an undivided joint interest in EPIC’s 700-mile Y-Grade NGL pipeline that extends from West Texas to the Eagle Ford. EPIC recently announced commercial service on its first greenfield fractionator in Robstown, Texas.

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The New Pipeline Landscape vs the Law of Diminishing Returns

The New Pipeline Landscape vs the Law of Diminishing Returns

The nation’s pipeline projects this year have met with volcanic reactions that canceled three majors in the Eastern Atlantic, stalled several others, and turned upside down at least three already in service. These are the facts at hand, which now bring even greater challenges to natural gas and power utilities in need of more fuel to meet consumer demand; refineries that require feedstock; petrochemical facilities that depend on supplies to produce raw materials used globally; and U.S. producers who transport oil and gas to end markets. If the current pipeline landscape subsists, the aftereffects are predicted to bring seriously diminishing returns in an era of carbon-neutral goals.

Rystad Energy

Rystad Energy is an independent energy research and business intelligence company providing data, tools, analytics and consultancy services to the global energy industry. Their products and services cover energy fundamentals and the global and regional upstream, oilfield services and renewable energy industries, tailored to analysts, managers and executives alike. 

www.rystadenergy.com

The nation’s pipeline projects this year have met with volcanic reactions that canceled three majors in the Eastern Atlantic, stalled several others, and turned upside down at least three already in service. These are the facts at hand, which now bring even greater challenges to natural gas and power utilities in need of more fuel to meet consumer demand; refineries that require feedstock; petrochemical facilities that depend on supplies to produce raw materials used globally; and U.S. producers who transport oil and gas to end markets. If the current pipeline landscape subsists, the aftereffects are predicted to bring seriously diminishing returns in an era of carbon-neutral goals.

According to Rystad Energy, if the Dakota Access Pipeline (DAPL) is shut down in August following a July court mandate to halt operations and empty its line of Bakken crude oil, an initial 300,000 BPD will have to be transported by rail. The DAPL is the largest outbound Bakken pipeline, which means other pipelines and refineries will need to absorb at least 900,000 BPD. And as far as those “other” pipelines, the DAPL ruling came on the heels of a court-ordered closure earlier in July of the Bakken’s Tesoro High Plains Pipeline that’s been in operation for 67 years. As curtailed volumes in the Bakken are expected to come back online later this year, Rystad foresees significant bottlenecks ahead with the lack of primary exit routes. This suggests more rail, more trucks, more flaring, and more emissions. Again, diminishing returns.

Rystad also predicts gas output from the Permian will rebound during the second half of this year and is expected to return to record levels by late 2021. That’s the good news. The bad news is that regulatory obstacles and belt-tightening have delayed or put on hold several pipelines to feed supplies to the East Coast, Gulf Coast LNG facilities, and Mexico. With the need for new gas takeaway projects from the Permian beginning in 2023, Rystad estimates another period of increased gas flaring citing it’s highly possible that any new pipelines will be approved too late, resulting again in a situation with insufficient infrastructure.

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Heartbeat Heard from the Keystone XL

Heartbeat Heard from the Keystone XL

Calgary-based TC Energy is back in the headlines this week with two big announcements that make us wish we were a fly in the boardroom when final decisions came down. With natural gas and crude oil systems in Canada, the U.S., and Mexico, TC’s biggest hurdle to date has been the $8 billion expansion of its Keystone Pipeline known as the Keystone XL. This project has languished over 11 years, two administrations, countless protests, and a cloaked signal by the company as late as last month that the project might be completely aborted.

TC Energy

TC Energy Corporation is a major North American energy company, based in Calgary, Alberta, Canada, that develops and operates energy infrastructure in Canada, the United States, and Mexico. The company operates three core businesses: Natural Gas Pipelines, Liquids Pipelines and Energy.

www.tcenergy.com

Guess what?  Shovel meet dirt.

The 1,661-mile Keystone XL is finally showing proof of life with the first phase of site prep now underway along the line’s route from the Canadian border across Mont., and S.D., into Nebraska. The oilsands pipeline will transport 830,000 BPD for ultimate deliveries to terminals on the Gulf Coast. No word yet on an anticipated completion date but, hey, TC’s waited this long to break ground so let’s keep our fingers crossed and RMR will keep you posted as the project progresses.

The day following the XL news, TC signed a $225 million deal with Calgary-based Tidewater Midstream and Infrastructure to purchase the nearly 81-mile, natural gas Pioneer Pipeline. With an initial capacity of 130 MMCFD, the Pioneer is supported by a 15-year, take-or-pay commitment from TransAlta, Canada’s largest electricity provider. TransAlta is currently transitioning from coal-fired to gas-fired power plants.

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The Money Backers: ArcLight

The Money Backers: ArcLight

In a nutshell, Boston-based ArcLight Capital Partners trains its eye and financial savvy on achieving midstream power. This private-equity firm has captured at least two industry headlines inside a week, announcing sizeable commitments to build and expand infrastructure and pipelines that are Gulf Coast bound.

ArcLight Capital Partners

Based in Boston, ArchLight’s investment team targets midstream, power and production opportunities with substantial growth potential, significant current income and meaningful downside protection, typically on a proprietary basis. They employ a hands-on value creation strategy that utilizes their in-house technical, operational and commercial specialists as well as their 1,500+ person asset management affiliate.

www.arclight.com

The first, a 50/50 joint venture with Midland, Texas-based Rattler Midstream to operate and expand the Yellow Rose natural gas gathering and processing system in the Permian with more than 84 miles of pipe and increased capacity to 40,000 MCFD. The project also will include construction of a new 60,000 MCFD processing plant, as well as incremental gathering and transportation pipelines. Rattler is not an ArcLight portfolio company but the two have bestowed their entity with a name that holds considerable bite—Amarillo Rattler.

The second, Houston-based Midcoast Energy’s CJ Express expansion project, which will add compression and pipeline facilities along Midcoast’s East Texas natural gas pipeline system extending from the Haynesville to the Gulf and increase transmission capacity to 1 BCFD.

Here’s a look at ArcLight’s 25 midstream portfolio companies:

  • AL Gulf Coast Terminals
  • BGH Holdings
  • Enstor
  • Lodi Holdings
  • NET Midstream
  • Offshore Infrastructure Partners
  • Pike Core Infrastructure
  • Ridgeline Midstream Holdings
  • Toga Offshore
  • Arkoma Pipeline Partners
  • Blue Ridge Asphalt
  • Gulf Oil
  • Magnolia Infrastructure Partners
  • North Sea Infrastructure Holdings
  • Perdido
  • RepconStrickland
  • SeaPort Midstream
  • Associated Asphalt
  • Bronco Midstream Holdings
  • Limetree Bay Holdings
  • Midcoast Energy
  • North Sea Midstream Partners
  • Petrotank
  • Republic Midstream
  • Southern Pines

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