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Navitas to Expand Encana's Permian NatGas Processing

Private equity-backed Navitas Midstream Partners LLC agreed Tuesday to expand its natural gas pipeline system in the Permian Basin, initially for Encana Corp., in a long-term agreement that would give it combined processing capacity of 155 MMcf/d in the Midland sub-basin.

The Warburg Pincus LLC-backed midstreamer agreed to purchase Encana Oil & Gas (USA) Inc.'s gas from its substantial acreage position in Howard County, TX. Navitas would gather gas into a new system consisting of low-pressure gathering lines, multiple compressor stations and a 38-mile, 16-inch diameter high-pressure pipeline, providing integrated services for both gas and natural gas liquids. Financial details were not disclosed.

"Encana has accumulated a tremendous acreage position in western Howard County," Navitas CEO R. Bruce Northcutt said. Encana initially entered the Permian in 2014 through a $7.1 billion purchase of Athlon Energy Inc., which gave it 140,000 net acres in the Permian's Midland sub-basin (see Shale DailySept. 29, 2014).

"We have seen tremendous well results from the Wolfcamp and Spraberry formations in western Howard County, and our new infrastructure and producer-focused midstream services will bring competitive advantages to oil and gas operators in the area," Northcutt said.

In addition to the new gathering system and purchase agreement, Navitas plans to build a cryogenic processing capacity near its existing Spraberry processing complex in the Permian to accommodate gas produced by Encana and other producers in Howard, Glasscock, Martin, Midland and Upton counties of West Texas.The new processing facilities also would include carbon dioxide treating and nitrogen rejection capabilities.

Navitas also plans to loop a significant portion of its existing Spraberry system mainline with a new 20-inch diameter high-pressure gas pipeline. The entire project is expected to be completed in 2Q2017. Navitas said it is continuing to install more field compression as part of its plan to improve operating run-times and reduce losses.

Based north of Houston in The Woodlands, Navitas was formed two years ago by Warburg to develop and operate midstream assets in multiple North American basins (see Shale DailyJune 5, 2014). Northcutt, who has led Navitas since the start, formerly was CEO of Copano Energy LLC (see Daily GPIJan. 31, 2013).

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