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Canyon Signs Midstream Agreements With Apache, XTO in Permian

Canyon Midstream Partners LLC has signed separate gathering and processing agreements with Apache Corp. and XTO Energy Inc. for midstream services on its James Lake system in the Permian Basin, the company said Thursday.

Houston-based Canyon also said it plans to add a 30 MMcf/d cryogenic turbo expansion train to its James Lake gas processing plant in Ector County, TX, a move that expands the facility's processing capacity from 70 MMcf/d to 100 MMcf/d (see Shale Daily, Jan. 10).

Canyon did not disclose the terms of the midstream agreements with Apache and XTO, a subsidiary of ExxonMobil Corp.

Construction of the first phase of Canyon's James Lake system began in February and is expected to be completed in late 2014. The system will include the processing plant and approximately 60 miles of 12-inch gathering trunklines and six field compressor stations, and provide low-pressure gathering services to five counties in Texas: Andrews, Dawson, Ector, Gaines and Martin.

When completed, the James Lake system will deliver residue gas to the El Paso Natural Gas pipeline, and natural gas liquids (NGL) to DCP's Sand Hills NGL pipeline and Enterprise's Chaparral NGL pipeline. All three interconnections will be in the Goldsmith, TX, area.

A second phase of the James Lake system calls for building a second 100 MMcf/d cryogenic gas processing plant in Martin County, plus an additional 60 miles of 12-inch diameter trunkline, designed to expand the system's territory into Texas' Borden and Howard counties. Canyon expects the second phase to commence operations during first half of 2015.

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