SemGroup Corp., majority owner of the White Cliffs Pipeline, said Monday it would convert part of the system to move natural gas liquids (NGL) from Colorado to the Gulf Coast.
The system, which originates in Platteville, CO, in the Denver-Julesburg (DJ) Basin, now consists of two 527-mile, 12-inch diameter crude oil pipelines that move supply to the Cushing Hub in Oklahoma.
One of the pipelines would be converted to Y-grade service, with initial capacity of 90,000 b/d, expandable up to 120,000 b/d. The one crude pipe would be taken out of service in 1Q2019 and ramped up as an NGL line by late 2019, SemGroup said.
The revamped system would “provide a much-needed market solution to the DJ Basin, while at the same time optimizing White Cliffs to include both crude and NGL capabilities,” said SemGroup’s David Minielly, vice president of crude operations.
SemGroup, which owns 51% of White Cliffs and serves as operator, plans to construct a 12-mile extension south of Cushing to interconnect with DCP Midstream LP’s Southern Hills Pipeline, which would carry NGLs south to the Mont Belvieu fractionator near Houston.
Additionally, DCP plans to construct a 25-mile pipeline in the DJ to connect its system to White Cliffs.
The conversion is backstopped by 10-year agreements with DCP and its affiliate DCP Southern Hills Pipeline LLC. The agreements provide them with 50,000 b/d of NGL transportation capacity.
“This project provides producers and natural gas processors with a cost-effective and reliable solution to move valuable NGLs from Colorado to Mont Belvieu via Southern Hills Pipeline for processing and sale into the Gulf Coast marketplace,” Minielly said.
The project is part of DCP’s larger, multi-year planned growth strategy, including up to 1.5 Bcf/d of incremental processing and bypass capacity, and additional NGL and gas takeaway capacity.
“DCP is excited to join SemGroup in this critical project, as we provide necessary NGL takeaway infrastructure to our comprehensive integrated DJ Basin growth plan,” said DCP CEO Wouter van Kempen.
“The White Cliffs conversion and connection with our Southern Hills pipeline will tie the DJ Basin to the Gulf Coast market centers of Mont Belvieu, Sweeny, and beyond. This is another high return, capital efficient solution driving increased volumes and utilization on Southern Hills.”
DCP owns 66% of Southern Hills, with Phillips 66 Partners LP owning the remaining stake.
The project is estimated to cost $60-66 million, of which SemGroup would fund 51%.
White Cliffs and Southern Hills plan to launch a joint binding open season to seek additional commitments from other producers and processors in the DJ Basin. No timeline for the open season was announced.
In related news, on Tuesday Denver-based Sterling Energy Investments LLC said it plans to expand the processing capacity and associated natural gas gathering pipeline infrastructure of its Centennial System in the northeastern DJ to 220 MMcf/d to accommodate growing producer demand.
The privately held firm, which has been working in the DJ since 2000, said it would expand capacity at the existing Centennial Gas Processing Plant by up to 120 MMcf/d. The permitting process is underway, and management expects to commision the expansion in the second half of 2019.
Sterling recently completed the first phase of an expansion of its existing Jackson Lake Processing Plant and plans to place the cryogenic expansion into service later this year.
“Our continued investment in expansion projects across the Centennial System footprint ensures our producers receive timely access to the midstream infrastructure and markets necessary to maximize production and support their development plans,” said Sterling President David Kenyon.
The Centennial System consists of more than 450 miles of low-pressure gathering pipeline spanning Colorado’s Weld, Morgan, and Logan counties, as well as Cheyenne County in Nebraska. The system includes three interconnected gas processing plants, each connected to a different downstream residue gas market.
Residue gas takeaway is provided by Cheyenne Plains, Tallgrass Interstate Gas Transmission and Southern Star pipelines. NGL takeaway is provided by Overland Pass Pipeline.
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