Open Season Extended on 650-Mile Jupiter Pipeline

Jupiter Energy extended an open season until May 31 for the 650-mile, 36-inch Jupiter pipeline stretching from the Permian to the Port of Brownsville.

“We're very pleased with the results of the initial open season period for the Jupiter Pipeline,” said Albert Johnson, president of Jupiter Pipeline. “The supplemental period validates our belief that the interest for transportation commitments on the pipeline is as substantial as expected.”

The pipeline will be originating near Crane, Texas, and Gardendale/Three Rivers, Texas and is the only pipeline out of the Permian Basin with access to all three deep water ports in Texas (Houston, Corpus Christi and Brownsville). It is expected to be operational in fourth quarter of 2020.

It will have direct access to a fully capable VLCC loading facility off coast at Brownsville, where the Jupiter Brownsville Terminal will consist of up to 10 million barrels of storage, three docks and an offshore VLCC loading facility.


Service Started on 658-Mile Shin Oak NGL Pipeline From Permian Basin to Mont Belvieu

The Shin Oak NGL Pipeline project to move natural gas liquids from the West Texas town of Orla to a processing and storage facility in Mont Belvieu, has its service started, announced on Thursday by Houston pipeline operator Enterprise Products Partners.

Shin Oak is designed and built as a 24-inch diameter 658-mile pipeline and is starting its service with an initial capacity to move 250,000 barrels of ethane, propane, butane and other natural gas liquids per day.

"The Shin Oak Pipeline represents another important addition to our expanding network of integrated midstream assets in the Permian Basin," Enterprise Products Partners CEO A.J. "Jim" Teague said in a statement.

The company is building a third natural gas processing plant in Orla that is expected to be completed by June. Another natural gas processing plant in the Loving County of Mentone is expected to begin service by March 2020. Combined, the Orla and Mentone facilities will give Enterprise more than 1.6 billion cubic feet per day of natural gas processing capacity and more than 250,000 barrels of natural gas liquids production per day in the Permian Basin.


Two Houston Pipeline Companies Joining Forces to Add Crude Oil, NatGas & Saltwater Lines in the Permian

Five Point Energy of Houston and Matador Resources of Houston are partnering to form San Mateo Midstream II LLC. This will allow their customers to move more crude oil, natural gas and produced water on the New Mexico side of the Permian Basin.

"The Delaware remains one of the most promising producing basins in North America, yet it lacks sufficient permanent 'in-basin' midstream infrastructure," Five Point Energy CEO David Capobianco said in a statement.

The joint partnership plans to process 200 million cubic feet of natural gas per day, by building a cryogenic natural gas plant near Carlsbad, New Mexico. There are also plans to build two saltwater disposal wells and pipelines to move crude oil, natural gas and produced water from remote wells to nearby storage tanks.

San Mateo Midstream II is the second joint venture between Five Point Energy and Matador Resources. Matador Resources will own 51 percent of San Mateo Midstream II and Five Point will own 49 percent. The companies already launched San Mateo Midstream I LLC in Feb. 2017 to build pipelines and other infrastructure in Eddy County, New Mexico and Loving County, Texas.


Two Permian Saltwater Pipelines Placed in Service

Goodnight Midstream announced that its Llano Pipeline System in New Mexico and its Rattlesnake Pipeline System in West Texas are now in commercial service and will move a combined 600,000 barrels of wastewater or produced water from oil and natural gas wells in the Permian Basin to disposal sites.

Produced water is an industry term used to describe the water that surfaces as a byproduct of oil and natural gas production.

The Llano Pipeline System includes 45 miles of gathering pipelines which will move produced water from oil and natural gas wells in Lea County, New Mexico to three saltwater disposal wells.

The Rattlesnake Pipeline System includes 25 miles of gathering pipeline that will move produced water from oil and natural gas in Ward County, Texas to nearby disposal sites.

Goodnight Midstream, which was formed in 2011 operates produced water pipelines and saltwater disposal wells in the Bakken Shale of North Dakota, the Permian Basin, and Eagle Ford Shale of South Texas.


Exxon: The 12-Year Deal to Produce Oil Via Wind and Solar Energy

Exxon Mobil will use renewable energy to produce oil in West Texas.

The company has teamed up with Denmark’s Orsted A/S and will have a 12-year agreement to buy 500 megawatts of wind and solar power in the Permian Basin. The agreement makes it the largest ever renewable power contract signed by an oil company.

After being sued for downplaying the risks of global warming, the company is turning to clean energy as it becomes cheap enough to compete with fossil fuels.

Output in the region has been growing rapidly, making pipeline infrastructure struggle to keep up.

The Delaware Basin in the Permian consumed the equivalent of 350 megawatts this summer, enough to power 280,000 U.S. homes. Demand is likely to triple by 2022.

Half of the power Exxon will buy will come from the Sage Draw wind farm that Orsted plans to finish building in 2020. The rest will be from the Permian Solar farm scheduled to be finished in 2021.


Houston Company Receives Funding to Build New 1 Million Bpd Pipeline

The Jupiter Pipeline, a new 1 million barrel a day crude oil pipeline from West Texas to Brownsville, has received the funding required to be built last week.

The pipeline is under development by Houston-based JupiterMLP and is receiving funding commitments from Charon System Advisors. Charon System Advisors is an affiliate of Houston-based private investment firm Spinel Investment Company.

JupiterMLP has secured permits to build more than 2.8 million barrels of storage and has given governmental and regulatory permits to load and unload vessels that can carry up to 65,000 deadweight tons.

Pipelines from the Permian to the Corpus Christi region are also being developed by San Antonio-based EPIC Midstream and Houston's Phillips 66 and Plains All American.


Enterprise's Seaway Pipeline Delayed Until End of Year Due to "Third Party Issues"

Enterprise Products Partners LP’s Seaway crude pipeline will not achieve the targeted 950,000 barrels per day capacity because of issues unrelated to the expansion, the company revealed on Tuesday.

Enterprise and its joint venture partner Enbridge originally expected to begin taking an additional 100,000 bpd in September but that target date was delayed due to what the company described as “third-party issues unrelated to the capacity expansion, an Enterprise spokesman said. No further details were provided.

Recently, the company began adding a friction-reducing agent to increase the potential capacity of the 760-mile pipe.

In the Permian Basin, crude production has outpaced the region’s pipeline capacity, causing bottlenecks and depressing prices in the region. Enterprise and others are building new pipelines or expanding existing lines to soak up the new production.

Seaway’s existing system was expanded several years ago to carry up to 850,000 bpd from the main U.S. crude storage hub in Cushing, Oklahoma, to storage facilities and refineries along the Gulf Coast.


ArcLight Capital to Buyout American Midstream Partners

ArcLight Capital, a Boston-based private equity firm, said Friday that it plans to buy out the Houston pipeline company American Midstream Partners and take it private.

The deal puts American Midstream’s value at nearly $330 million.

American Midstream, which owns pipelines in Texas, the Gulf of Mexico and North Dakota, moved from Denver to Houston about two years ago.

Bottle necks in the pipeline systems are slowing the pace of growth in the Permian and is forcing producers to sell their crude at substantial discounts to prices on the Gulf Coast.

The burst of activity in the pipeline sector is driven by the record crude and natural gas production in the Permian Basin in West Texas. The shortage of pipeline capacity is allowing private equity money to flow into the region.

Houston Chronicle

600-Mile Permian Gulf Coast Pipeline to Cost Nearly $2 Billion

Magellan Midstream Partners LP projected on Wednesday it would spend nearly $2 billion to construct a proposed crude oil pipeline from the Permian Basin in West Texas to the U.S. Gulf Coast. 

"We have binding commitments that give us very attractive economics. But what we don't know is the full demand," which would dictate the project’s final cost, Magellan's chief executive Michael Mears said at the Barclays energy conference in New York. 

The project cost for the Permian Gulf Coast pipeline won’t be made clear until after shippers commit to volume capacity during the open season, Mears said. The bidding process for additional shipper commitments will be launched later this week.

The new partnership by Magellan, Energy Transfer Partners, and others adds another project to the race to build crude oil pipelines from West Texas’ booming Permian Basin to refining and export hubs in Houston, Corpus Christi, and Beaumont.

Due to the lack of pipelines carrying oil, Permian oil drilling and well completions are slowing down. Until new pipelines start coming in the middle of 2019, companies are relying on trucks and trains to move crude.

The pipeline would come online in mid-2020 and would stretch to Magellan’s East Houston terminal and to Energy Transfer’s Nederland terminal near Beaumont.


EagleClaw Midstream To Pay $950 Million to Buy Rival Caprock

Blackstone-backed pipeline company EagleClaw Midstream Ventures LLC said on Wednesday it would buy rival Caprock Midstream Holdings for about $950 million.

Midstream companies are investing in the Permian Basin as a surge of oil and gas production has outstripped transport capacity.

EagleClaw will buy Caprock from Dallas-based private equity firm Energy Spectrum Capital and Caprock Midstream Management.

Caprock will be renamed to EagleClaw Midstream II and operate as a sister entity to EagleClaw after the deal closes this year.

EagleClaw Midstream is a portfolio company of Blackstone Energy Partners, Blackstone’s energy-focused private equity business.


Energy Transfer to Team Up with Multiple Companies and Build 600 Mile Permian Pipeline

Energy Transfer Partners is teaming up with Magellan Midsteam Partners and others as they plan a new 600-mile Permian pipeline system to Houston.

Dallas-based Energy Transfer and Oklahoma’s Megellan said they have partnered with Israel’s Delek Group and Ohio-based MPLX, which is the pipeline arm of Marathon Petroleum, to fund the construction of the multibillion-dollar pipeline project. They have confirmed that they have enough customer support to move forward.

The new partnership adds another project to the race to build crude oil pipelines from West Texas’ booming Permian Basin to refining and export hubs in Houston, Corpus Christi, and Beaumont.

Due to the lack of pipelines carrying oil, Permian oil drilling and well completions are slowing down. Until new pipelines start coming in the middle of 2019, companies are relying on trucks and trains to move crude.

The pipeline would come online in mid-2020 and would stretch to Magellan’s East Houston terminal and to Energy Transfer’s Nederland terminal near Beaumont.


Houston Pipeline and Storage Company Gets Investment from Former Moda and Lotus Investors

Houston-based Candor Midstream LLC, a pipeline and storage company, announced on Tuesday that it received a $200 million equity commitment from San Antonio-based investment firm EnCap Flatrock Midstream.

Candor Midstream’s President and CEO was a former executive with Crestwood Midstream Partners LP and Enbridge. The newly invested money could be used to acquire existing assets or to start new projects.

EnCap Flatrock Midstream also funded two Houston energy firms that spent $2.6 billion on assets owned by Occidental Petroleum, also known as Oxy. Oxy sold its crude oil export Ingleside Energy Center Terminal to Moda Midstream and its Centurion pipeline system from West Texas to Cushing, Oklahoma to Lotus Midstream. Both Moda and Lotus are backed by EnCap FlatRock Midstream.

Occidental was expanding its Ingleside export terminal to handle greater volumes, resulting in the sale. Oxy has been focusing on oil and gas production in West Texas’ Permian Basin oil field, and has been selling other assets.

Houston Chronicle

Carrizo to Focus on Permian as They Acquire 10,000 Acres from Devon Energy

Houston-based Carrizo Oil & Gas said it's growing its Permian Basin presence by acquiring about 10,000 net acres from Oklahoma’s Devon Energy for $215 million. Carrizo said that the land acquired fits in their geographical footprint.

This purchase, along with last year’s decision to sell all of its assets in the Marcellus and Utica shale plays, proves Carrizo’s intention to focus exclusively on the Permian and South Texas’s Eagle Ford shale.

The shifted focus is intended to ramp up activity as new pipeline projects are completed in the next year, making it easier and cheaper to transport oil and gas to port and refining hubs near Houston and Corpus Christi.

“We expect to seamlessly integrate these assets into our existing development plan for the area, which currently assumes a ramp-up in activity in the second half of 2019 as Permian pipeline takeaway is forecast to increase," said Carrizo Chief Executive. "Over time, we see the potential to achieve meaningful efficiencies through optimizing future large-scale pad development, drilling longer-lateral wells, and integrating the existing infrastructure within our system."

Devon agreed to get out of the pipeline business by selling its stake in Dallas-based EnLink Midstream for more than $3 billion to the private equity-backed Global Infrastructure Partners in New York in early June.

Houston Chronicle

Oxy to Sell Ingleside and Crude Oil Infrastructure to Moda and Lotus Midstream

Moda Midstream, LLC announced on Wednesday that it has entered into a definitive agreement to acquire the Oxy Ingleside Energy Center (IEC) and certain crude oil and LPG infrastructure form Occidental Petroleum Corporation. The transaction is expected to close in the third quarter of 2018, subject to customary closing conditions.

Strategically located in Ingleside, Texas, IEC resides near the mouth of Corpus Christi Ship Channel with minimal transit times to the Gulf of Mexico.

Oxy is also selling the Centurion pipeline system to Lotus Midstream. The pipeline extends from the Permian to an oil storage and transportation hub in Cushing, Oklahoma.

The combined $2.6 billion transaction are part of an effort for Oxy to focus on its growing production in the Permian. Oxy is easily one of the largest producer’s in the Permian.

Chief Executive Vicki Hollub emphasized the company’s focus on the Permian

“The Permian is now the foundation and the growth of our company,” Hollub said. “The bulk of our growth capital will continue to go to the Permian Resources business.”

The transactions by Moda and Lotus are the largest in their companies’ history.

Houston Chronicle
World Pipelines

Medallion Midstream Asks for Bids for New Expansion

Irving-based Medallion Midstream announced an open season on Monday and is asking for bids as it anticipates a planned expansion.

The West Texas crude oil pipeline system will make a major expansion in the Midland Basin. The oil field is part of the larger Permian Basin, which has seen enormous growth in oil and gas production over the last few years.

Medallion said that the plan was to place new 16-inch pipes along its existing pipeline system, without specifying how many miles would be added, nor the capacity.

Currently, the system runs approximately 700 miles of six-inch diameter pipe.

The expansion comes a week after Oryx Midstream Services announced its own expansion of regional crude oil pipeline in which it will add 180 miles to its existing system.

Houston Chronicle

3,203 Permian Wells Drilled But Unfinished Last Month, Highest Ever

A 90% increase of postponed fracking compared to last year has resulted in a record high of Permian wells being drilled but left unfinished since the Energy of Department began tracking them 5 years ago.

Last month's number surged to 3,203 unfinished wells, forcing drillers to wait for pipeline owners to catch up.

With the wells reaching full capacity in a few months, the president of the Panhandle Producers and Royalty Owners Association said, “I think without a doubt you’re going to see shut-in wells."

Small operators that haven’t locked in pipeline space are going to feel the effects that the lack of pipeline infrastructure will create, according to EOG Resources.

EOG's exploration chief warned that companies that were a "little late to the table" are going to struggle because of the lack of leverage at the negotiating table.

Houston Chronicle 

Apache Corp, Noble Energy to be Major Customers of 730-Mile EPIC Crude Pipeline in Permian

Apache Corp and Noble Energy have signed on as the primary customers for the 730-mile EPIC crude oil pipeline that will move from Texas' Permian Basin to Corpus Christi.

The pipeline is being built by EPIC Midstream Holdings and is expected to be one of the biggest pipelines in a group of major pipeline projects that are underway in the booming Permian to carry oil, gas, and natural gas liquids to port and refining hubs near Corpus Christi and Houston.

EPIC Midstream is also building a natural gas liquids pipelines adjacent to the crude oil project, to which BP has signed on as a major anchor customer.

Apache and Noble have agreed to use 30 percent of the pipeline's planned capacity of 590,000 barrels a day. The crude oil pipeline is expected to come online by the end of 2019.

Fuel Fix

Energy Transfer Plans 600,000-bpd Crude Pipeline from Permian Basin to Texas Coast

Energy Transfer Partners said Thursday it is building a crude pipeline from the Permian basin to the Houston Ship Channel and Nederland, Texas to serve growing export markets at coast ports.

The pipeline will have an initial capacity of 600,000 barrels per day and will be expandable to 1 million barrels per day, according to the company. The pipeline is planned to come online by 2020.

Energy Transfer Partners is also asking federal regulators for permission to put the full Rover natural gas pipeline in service by June 1. The Rover pipeline is designed to carry 3.25 billion cubic feet per day of gas from the Marcellus and Utica shale fields to the U.S. Midwest and Ontario, Canada.

Energy Transfer Partner's Mariner East 2 natural gas liquids pipeline in Pennsylvania has been delayed to come online in the third quarter of this year. Mariner East 2 is designed to expand capacity of the existing Mariner East from 70,000 to 345,000 barrels per day.

Energy Transfer is also planning an expansion called Mariner East 2X that will add another 250,000 barrels per day to the Mariner East project. The expansion is expected in 2019.

The company also said its 1.4 billion cubic-feet-per-day Red Bluff gas pipeline in the Permian will enter service later this month.


Marathon Petroleum Buys Andeavor for More than $23 Billion

Marathon Petroleum Corporation last week said it would buy Andeavor for more than $23 billion to become the largest independent U.S. refiner by capacity at a time when U.S. crude production is at record-high levels.

Marathon will acquire all of Andeavor's refineries, including those located in Alaska, California, Minnesota, New Mexico, North Dakota, Texas, Utah, and Washington. The acquisition will complement Marathon's Midwest and Gulf Coast operations.

The combined company will have the ability to process about 3.1 million barrels per day along with a large network of filling stations and oil and natural gas pipelines.

Marathon CEO Gary Heminger, who will run the combined company, said the acquisition enhances its "midstream footprint in the Permian Basin and creates a nationwide retail and marketing portfolio."


Permian Basin Sees Another Big Rig Count Jump

The overall rig count in West Texas' Permian Basin increased by eight rigs last week, which single-handedly accounted for a significant rise in the number of rigs actively drilling for petroleum in the U.S.

The total overall rise of rigs in the U.S. last week was five after small declines were seen in Colorado, North Dakota, and Oklahoma.

Of the 1,013 current total rigs in the U.S. 820 account for oil drilling while the rest are for natural gas.

The Permian Basin accounts for 55 percent of all of the oil rigs in the U.S. with the most active area being Eagle Ford in South Texas, which has 76 rigs. Texas alone has 509 rigs overall.

Although companies are now producing more oil after a plummet in the market a few years ago, they are doing it with fewer rigs than the U.S. oil rig count peak in 2014 by drilling deeper wells and more frequently.

Fuel Fix