Tallgrass Energy LP and Silver Creek Midstream LLC have agreed to expand their joint venture (JV) in the Powder River Basin (PRB), where both companies have been focused on building out infrastructure to serve growing oil and natural gas volumes.
The JV, which was formed last February, is now called Powder River Gateway LLC. It would own the Iron Horse Pipeline and the Powder River Express Pipeline (PRE). Under the expansion, Tallgrass would operate and own 51% of the PRE and Silver Creek would own 49%.
Both pipelines would transport crude oil produced in the PRB from Silver Creek’s Pronghorn Terminal in Guernsey, WY, where it would have access to Tallgrass’ Pony Express system and other takeaway pipelines. The 80-mile, 16-inch diameter Iron Horse Pipeline is expected to enter service in 1Q2019 with a capacity of 100,000 b/d, while the 70-mile, 12-inch diameter PRE is in service with a 90,000 b/d capacity.
The crude oil terminal facilities in Guernsey have 370,000 bbl of storage capacity that will ultimately be increased to more than 1 million bbl once they’re fully constructed.
Silver Creek is also expected to start construction soon on gathering and trunkline infrastructure in the region. Tallgrass expects to launch an open season for additional expansion capacity out of the Guernsey facility next month.
“We look forward to expanding our partnership with Silver Creek as they continue to extend their footprint in the PRB,” said Tallgrass COO Bill Moler. “Our combined Powder River pipeline system will offer superior transportation service and increased expansion flexibility, allowing Powder River Gateway to continue offering the most competitive rates and services in the PRB as production continues to increase.”
Interest in the PRB and its multiple formations is surging, especially as bottlenecks in the Permian Basin hamper some development. Anadarko Petroleum Corp., Chesapeake Energy Corp., Devon Energy Corp. and EOG Resources Inc. are among some of the operators again focused on the region.
Anticipating growth, Tallgrass in May said it was considering adding a 120 MMcf/d processing train to its natural gas processing plant at Douglas, WY. Two months later, Crestwood Equity Partners LP announced plans to expand the Jackalope natural gas gathering system and the associated Bucking Horse gas processing facility in Wyoming. Jackalope is a 50/50 JV between Crestwood and Williams.
Evolution Midstream LLC also announced in August that it had broken ground on its Jewell natural gas processing plant in Converse County, WY, in the heart of the PRB.