After closing on a long-term oil transportation agreement, Oryx Midstream Services II LLC plans to begin building a 220-mile crude oil transportation pipeline system to serve the Permian Basin’s Delaware sub-basin, with initial capacity of up to 400,000 b/d.

The Midland, TX-based producer said the pipeline would provide receipt points in the Carlsbad, Stateline, Pecos and Pyote operating areas of the sub-basin, and deliver crude oil to Midland and Crane, TX. The company said the system would serve “every active county” in the Delaware, including New Mexico’s Eddy and Lea counties, and the West Texas counties of Culberson, Loving, Pecos, Reeves, Ward and Winkler.

The system, expandable depending on shipper needs, is to to be built in phases and include 16-, 20- and 24-inch diameter pipeline. The system is to be placed into service by the end of 2018.

Oryx said it recently closed on a long-term regional oil transportation agreement with WPX Energy Inc. and other producers that dedicated 300,000 acres. When combined with separate agreements involving Oryx Midstream Services LLC, also known as Oryx I, the company said its total footprint in the Delaware would be more than 850,000 acres, with 600,000 b/d of system capacity.

“As ongoing improvements are made in drilling technologies and rig counts in the Delaware Basin increase, production growth from Oryx’s customer base, including WPX, continues to be strong,” said CEO Brett Wiggs. “With this strong production growth comes transportation bottlenecks, an issue that this new pipeline will address, providing much-needed takeaway capacity in the area.”

Oryx President Karl Pfluger added that the company is “considering strategic opportunities to leverage the unique scale of our combined footprint to better serve producers in the Delaware Basin. One of these strategic opportunities includes a potential long-haul transport system to the Gulf Coast.”

Oryx I was launched in 2014 by an initial equity commitment of up to $300 million from management, private investors and private equity from Quantum Energy Partners, Post Oak Energy Capital and Wells Fargo Energy Capital. Last March, Oryx II closed on an equity commitment of $340 million from the same sponsor group, bringing the total commitment to $640 million.