Dallas-based Azure Midstream Energy LLC, owner of Azure Midstream Partners LP, is expanding the Holly Gas Gathering System, which is mainly located within the DeSoto, Red River and Caddo parishes in North Louisiana and currently serves the Haynesville and Bossier shale formations and the liquids-rich Cotton Valley formation. Construction has begun on Azure's Holly Production Optimization Project, which will extend the core Holly footprint and reduce line pressures, maximizing the utilization of the 2.1 Bcf/d capacity system. Reducing pressure on Holly from more than 1,200 pounds per cubic inch to 500 pounds per cubic inch enhances volume deliverability from new and existing production. Azure will also add a nine-mile extension of 12-inch diameter gathering pipeline. The lateral will connect existing dedicated production on the northwest side of Holly and connect to several prospective undeveloped sections dedicated from existing anchor producers. The lateral can have initial throughput of 40 MMcf/d with potential to add "substantially more supply" in 2016, Azure said. The project will also add 15,000 hp of compression with ultimate capacity of 600 MMcf/d and is expected to be in service by October. Azure expects the total cost of the project to be $24 million.