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FERC Green Lights Blue Mountain Natural Gas Delivery Line in Oklahoma

Linn Energy Inc. subsidiary Blue Mountain Midstream LLC has been given the go-ahead by FERC to construct a residue natural gas line to help expand Oklahoma takeaway.

Blue Mountain on Tuesday was granted a blanket construction certificate by the Federal Energy Regulatory Commission for the gas delivery line [No. CP18-14-000]. It also was given limited approval to redeliver the residue gas to third-party transporters. All of the gas would be produced by Linn or purchased from Oklahoma producers, and Blue Mountain would be the sole shipper.

Blue Mountain, which may be spun off later this year, was tasked by Linn to expand production capacity from Oklahoma’s Merge prospect and the two big targets, the South Central Oklahoma Oil Province (SCOOP) and the Sooner Trend of the Anadarko Basin, mostly in Canadian and Kingfisher counties (STACK).

Blue Mountain was formed as part of Linn’s corporate revamp, which includes plans to create three standalone businesses, with Blue Mountain as one. Among other things, under Blue Mountain’s purview is the 225 MMcf/d Chisholm Trail Cryogenic Gas Plant, which is set to be completed by mid-year.

Post-certification and construction, Blue Mountain would own and operate gas gathering and processing facilities in the Merge/SCOOP/STACK production area of Grady and Canadian counties, OK, including the existing Blue Mountain Gathering System, Chisholm Trail and the residue line, FERC noted.

The gathering system now pulls gas from 23 wells, with plans to increase gathering to 35 wells by the end of the year. In late 2017, Blue Mountain had about 80,000 dedicated net acres from Linn’s Merge prospect alone.

Because the residue gas does not meet pipeline standards, Blue Mountain sought FERC approval to build and operate the residue line downstream from the plant, discharging into a delivery point to Oneok Gas Transportation LLC.

“Increased production volumes as well as the siting of recent additional drilling facilities have put a strain on Blue Mountain systems,” FERC noted. “The delivery line is necessary to transport processed gas from the plant to an interstate pipeline transmission system and will ultimately contribute an additional 225 MMcf/d of natural gas supply to markets in Oklahoma and neighboring states.”

The project involves constructing two gas pipelines totaling 9.57 miles, as well as a metering/pigging facility that would be constructed in two stages.

The first stage, Enable Discharge Line No. 127, would be a 20-inch-diameter steel pipeline running about 4.35 miles from the plant tailgate to the metering/pigging facility, or central delivery point (CDP). From there, gas could flow to one of two interstate pipeline receipt points downstream.

While the Enable line is being constructed, Southern Star Central Gas Pipeline Inc. plans to build a 5.5-mile pipeline from its facilities in Grady County to the CDP.

The second stage of the project, Enable Discharge Line No. 128, would be a 12-inch diameter pipeline from the CDP running 5.20 miles to an interconnect with gas pipeline facilities operated by Enable Gas Transmission LLC, also in Grady County.

Blue Mountain had requested a certificate for all of the 9.7 mile delivery line, but FERC said, “The timing of construction makes segmentation of what is essentially a single project constructed in two stages inappropriate.” That made the entire delivery line ineligible for an exception.

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