From the Houston Business Journal
Crestwood Equity Partners (ticker: CEQP) is teaming up with First Reserve to build a roughly $170 million natural gas pipeline between New Mexico and Texas.
Crestwood Equity and First Reserve have bought Crestwood’s Willow Lake gathering and processing assets located in Eddy County, New Mexico, as part of the project, according to a release. The two companies are also building a 200 million cubic feet per day cryogenic gas processing plant located near Orla, Texas.
They’ll connect those two with a pipeline, which is expected to run about 33 miles. Service is planned to start in the second half of 2018.
“(This) is an important step in Crestwood’s strategy of expanding and integrating our Delaware Basin footprint to create a super system that spans over 2 million acres located in the heart of the most active development counties in the Delaware Basin,” Robert Phillips, chairman, president and CEO of Crestwood’s general partner, said in the release.
The plant in Orla is expected to serve gas coming from fields operated by Exxon Mobil Corp., Marathon Oil Corp., Concho Resources Inc., Mewbourne Oil Co. and others, per the release.
The joint venture is 50-50 between Crestwood and First Reserve, per the release. The private equity firm is expected to pay for initial capital requirements, and Crestwood is expected to fund the capital requirements until both parties have made an equal amount of capital contributions.
The joint venture is also expected to own all of Crestwood’s Delaware Basin assets, per the release. After the Orla plant is in service, the joint venture’s asset footprint will include more than 200,000 acres of dedication, 255 MMcf/d of processing capacity, 300 MMcf/d of gathering capacity and more than 360 miles of pipe.
In September 2016, Crestwood entered into an agreement to construct, own and operate a new natural gas gathering system in an area of the Permian-Delaware Basin in West Texas. The agreement was with SWEPI LP, a subsidiary of the Netherlands-based Royal Dutch Shell PLC (NYSE: RDS-A, RDS-B). It provided Crestwood with gathering rights for SWEPI gas production across about 100,000 acres in Loving, Reeves and Ward counties in Texas. The project’s buildout was expected to cost about $180 million.
Crestwood Equity completed its acquisition of affiliate Crestwood Midstream Partners LP in October 2015. In 2016, the company sold a 50 percent stake in its natural gas pipeline and storage facility in southern New York and northern Pennsylvania to Consolidated Edison Inc. (NYSE: ED) for $975 million.
