A trio of companies, some with energy assets in the Midcontinent, has agreed to form a joint venture (JV) called Cimarron Express Pipeline LLC, to build a crude oil pipeline connecting the region's stacked reservoirs to a terminal at the Cushing Hub.
Kingfisher Midstream LLC (KFM), a subsidiary of Alta Mesa Resources Inc., announced Thursday that it would partner with Blueknight Energy Partners LP and affiliates of Ergon Inc. to build the 65-mile, 16-inch diameter pipeline. The system would have an initial capacity of 90,000 b/d, but could be expanded to more than 175,000 b/d.
Cimarron Express would originate in Kingfisher County, OK, and serve producers in Oklahoma's Sooner Trend of the Anadarko Basin, mostly in Canadian and Kingfisher counties play, aka the STACK. It would connect to Blueknight's crude oil terminal at Cushing. The new pipeline is expected to be completed by mid-2019.
KFM COO Craig Collins said Cimarron Express would give STACK producers "the opportunity to maximize the value of their crude oil production. We also see long-term value in this project...as we aggregate STACK oil volumes on our crude gathering system to deliver to Cimarron Express."
Ergon CEO Emmitte Haddox added that the pipeline "will create value not only for our companies, but for other STACK producers, customers and the communities in which we operate."
KFM would own a 50% stake in the JV, with Ergon, owner of the general partner of Blueknight, owning the remaining 50%. Ergon would hold its ownership through a new subsidiary called Ergon-Oklahoma Pipeline LLC, aka Devco. Ergon and Blueknight also entered into an agreement that would give each party rights concerning the purchase or sale of Devco, subject to certain terms and conditions.
Concurrent with the formation of Cimarron Express, Alta Mesa agreed to a long-term dedication and transportation agreement with the new pipeline to incorporate about 120,000 net acres in Oklahoma's Garfield and Kingfisher counties.
Under the JV, Blueknight would build and operate Cimarron Express and continue to operate its existing crude oil storage facilities at Cushing. A receipt terminal for the new pipeline would be built at KFM's crude oil storage facility in northeastern Kingfisher County. Cimarron Express would also connect to KFM's crude oil gathering system and truck unloading facilities there.
KFM announced in late 2016 that it would expand its natural gas gathering and processing systems in the STACK, as well as its crude oil gathering systems in the play. The expansion was prompted by increasing activity by producers in the STACK.