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Santa Fe Midstream Readying Permian NGL System for Mid-2018

Private equity-backed Santa Fe Midstream LLC said Friday it has jumped into the natural gas processing game in the Permian Basin, with a system underway that should be operational by mid-2018.

Construction within the San Andres formation in West Texas began in August. The Permian is riddled with dozens of oil and gas targets, and the San Andres, considered an emerging target, is a reservoir that runs through West Texas and southeastern New Mexico.

Along with its gas building, the midstreamer, which is based in Plano near Dallas, also is developing a crude oil system in the region.

“Due to the increasing activity and rapid growth of the San Andres play in Yoakum, Cochran and Gaines counties, producers have expressed significant interest in new crude oil and natural gas gathering infrastructure,” said Managing Partner Amer Rathore.

Besides Texas infrastructure build-out, Santa Fe is planning to build midstream facilities in Lea County, NM, in the heart of that state’s Permian activity. The New Mexico facilities initially would serve a “substantial dedication” from an undisclosed producer that is sponsored by a “large energy private equity fund.”

Residue from the gas processing plant and treating facilities near Denver City, TX, are going to be delivered to an El Paso Natural Gas interstate pipeline with access to the Waha hub and to western U.S. markets. Natural gas liquids (NGL) would be delivered to Enterprise Products Partners LP’s Chaparral NGL System, which transport to the Mont Belvieu hub.

“By connecting to multiple crude oil markets as well as premium natural gas and liquids markets, Santa Fe will provide the best possible netbacks for producers in the area,” said CEO Greg Kegin. “We look forward to supporting producers’ drilling plans by expanding our system.”

Santa Fe is backed by a fund of Dallas-based Energy Spectrum Capital, midstream-focused private equity firm that has raised more than $3.5 billion to invest in North America’s energy infrastructure. Since its inception in 1996, Energy Spectrum has sponsored more than 50 portfolio companies.

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