About 7,200 acres in Oklahoma’s Merge prospect have been dedicated to Blue Mountain Midstream LLC’s Chisholm Trail system, Linn Energy Inc. said Wednesday.
Linn subsidiary Blue Mountain reached an agreement for the dedication for Chisholm Trail with Gaedeke Merge LP. No financial details were disclosed.
The 10-year agreement is for all current and future natural gas production within Grady and Canadian counties. First volumes are slated for early 2018. The agreement also is expected to add 10 wells to the Chisholm Trail system next year.
“The agreement with Gaedeke increases our dedicated acreage by approximately 10% and aligns with our goal of accelerating the growth of our valuable midstream business in the Merge,” said Linn CEO Mark E. Ellis.
“With more than 80,000 net acres in the core of the Merge now dedicated to Chisholm Trail and our new 250 MMcf/d cryogenic plant being commissioned in the second quarter of 2018, we believe Blue Mountain is well-positioned to succeed as a standalone midstream company.”
Earlier this month Houston-based Linn said it was considering whether to separate Blue Mountain, which was formed to develop Midcontinent infrastructure. Plans also are being laid by Linn to separate Roan Resources LLC, an exploration and production partnership formed to develop Oklahoma’s myriad reservoirs, including the Merge prospect.
The agreement with Gaedeke should “accelerate our timeline to reach full capacity at the plant and also to accelerate the construction of the gathering system within the footprint of the core development area for Roan Resources in the Merge,” Ellis said. More third-party dedications are anticipated in 2018
Chisholm Trail is a gas gathering, compression and processing system in the heart of Oklahoma’s prolific reservoirs plays, with 30 miles of existing gas gathering pipeline, a 60 MMcf/d refrigeration facility and access to offload an additional 20 MMcf/d.
Construction also is underway on a cryogenic gas processing system for Chisholm Trail that would have total capacity of 250 MMcf/d. It is set to be commissioned before the end of June.