San Mateo Midstream LLC said last Wednesday it has begun service on the Rustler Breaks oil pipeline to serve Permian Basin customers in New Mexico.

San Mateo, majority owned by Dallas-based Matador Resources Co., said subsidiary San Mateo Black River Oil Pipeline LLC ramped up the system in Eddy County within the Delaware sub-basin. It includes about 17 miles of 10-inch diameter pipeline that interconnects with a Plains Pipeline LP system.

“Placing the Rustler Breaks pipeline system into service completes San Mateo’s goal of being a full-service midstream solution for producers in the northern Delaware Basin,” said Senior Vice President Matt Spicer. “San Mateo is now able to offer services across all three production streams -- crude oil, natural gas and produced water.”

Matador CEO Joseph Foran said his company now has about 65% of its operated Delaware oil production on pipe with the start up of Rustler Breaks, “which provides added reliability and operational advantages.

“In addition, it immediately enhances our net pricing realizations in Rustler Breaks compared to trucking crude oil at current rates and potentially further improves our net pricing realizations if we elect to sell our crude oil into other markets -- including the Gulf Coast, Houston, Corpus Christi and Cushing crude oil markets."

San Mateo and Plains All American Pipeline LP, in looking to offer services to third-party producers, last January forged a joint development agreement covering about 400,000 acres in the Delaware. The agreement called for oil to be gathered and transported from the wellhead to Midland, TX, with access to other end markets including the Cushing hub and the Gulf Coast. A Plains unit also agreed to purchase Matador's oil production from Rustler Breaks and from its West Texas assets in Loving County, TX.