An Apache Corp. subsidiary and ARM Energy Holdings LLC said Monday that Salt Creek Midstream LLC is developing a 445,000 b/d natural gas liquids (NGL) header system in West Texas to serve growing production in the Permian Basin’s Delaware formation.
Apache Midstream signed an option to acquire a 50% stake in the $100 million SCM Alpine project, which is supported by 10-year commitments from both Salt Creek and Apache Corp.
The header system would consist of two pipeline segments that originate at both the Salt Creek and Apache processing facilities in southern Reeves County, TX. The pipeline would move liquids to the Waha hub, where it could interconnect to downstream pipelines providing access to Mont Belvieu and Corpus Christi fractionation facilities in the state.
Salt Creek was formed last month by ARM Energy and private equity firm Ares Management LP to develop midstream infrastructure in the Delaware sub-basin. ARM Midstream Management LLC would construct, manage and operate the system.
The project is another critical piece of Apache’s development plans for its gassier Alpine High play, which the company discovered in 2016 at the southern end of the Delaware.
“The development of this NGL project is another significant step in Apache’s Alpine High infrastructure buildout,” said the company’s Senior Vice President Brian Freed, who oversees midstream and marketing. “This project provides Apache access to the emerging Waha market area, increasing the company’s long-term operational flexibility and market optionality.”
Since the Alpine High discovery was confirmed, Apache has spent heavily in the play and discussed how critical the midstream buildout is to the company’s trajectory there, where it produced 26,000 boe/d in the first quarter, or 33% more than it did in 4Q2017.
The companies said construction on SCM Alpine has already started. The system is expected to be operational sometime in 1Q2019.