Tall Oak Midstream LLC has secured a natural gas gathering and processing agreement from all existing and future wells drilled on 40,000 net acres in Oklahoma's Kingfisher and Blaine counties, an area in the Midcontinent now better known as the Stack, or SCOOP, the South Central Oklahoma Oil Province.
Processing the gas through a long-term fixed-fee agreement would be done at the Chisholm Processing Complex now being built in Kingfisher County. Tall Oak did not disclose the customer(s).
"Notwithstanding the current commodity price environment, the Stack play is one of the most economic plays in the country and continues to provide strong returns for our customers," said Tall Oak Chief Commercial Officer Carlos Evans. "This important agreement strengthens our position in the Midcontinent, where we remain very focused on deploying the necessary capital and developing the infrastructure needed to stay ahead of our customers’ immediate and long-term needs."
The first cryogenic processing train at Chisholm is expected to come into service in September with an initial capacity of 100 MMcf/d. To support increased demand, Tall Oak has ordered a second train that would add 200 MMcf/d by the second half of 2016.
"Future expansions at the Chisholm complex will allow for a total of 700 MMcf/d in processing capacity as customer demand increases," management said. "Tall Oak is currently operating more than 100 miles of gathering pipelines in the Stack with plans to complete an additional 100 miles of pipe and two more compressor stations in 2015."
Tall Oak also is proceeding on the design and rights of way for a crude oil gathering, storage and transportation system to serve producers in the play. Anchored by a long-term agreement with Felix Energy LLC, the system would connect to multiple downstream pipelines with access to the market center at Cushing, OK.
Tall Oak expects to bring the oil system into service by the end of the year. The initial system is to consist of a storage and truck-unloading facility east of Okarche, OK, and a 20-mile pipeline. The Okarche facility is to have capacity to store 40,000 bbl. Ultimately, plans are to construct more than 200 miles of oil gathering pipelines and 150,000 bbl of storage.