Tallgrass Energy LP (TGE) and Kinder Morgan Inc. (KMI) on Tuesday agreed to boost crude oil takeaway capacity in the Power River and Denver-Julesburg basins, where increased interest in the plays has spurred a host of new infrastructure projects to relieve growing constraints in the region.

The proposed venture, which must obtain state and federal regulatory approvals, would also add incremental capacity to the Williston Basin and portions of Western Canada.

Under the plan, KMI would abandon portions of its Wyoming Intrastate Co. and Cheyenne Plains Gas Pipeline and convert them to oil service. The plan comes as KMI reported higher products pipelines segment earnings of $317 million in the fourth quarter of 2018, compared with $314 million in 4Q2017.

“There are a number of competitive advantages to jointly developing this project and leveraging KMI’s and TGE’s existing assets, including the expansion of our Double H Pipeline system,” KMI’s Don Lindley, chief commercial officer for products pipelines, said. “Chief among them is the ability to quickly and efficiently place an additional 550,000 b/d of crude transportation takeaway capacity in service from the Rockies, which helps domestic producers and offers near-term relief for Canadian producers.”

TGE would contribute the Pony Express Pipeline System, where it plans to extend its recent expansion that increased capacity to carry up to 400,000 b/d via pump optimization projects. The midstreamer extended a joint tariff open season on its proposed Seahorse Pipeline, which has been extended to Feb. 28.

In November, management indicated that based on commitments received, capacity on the pipeline could be expanded up to an additional 300,000 b/d beyond what is expected once the pump optimization projects were completed. The expansion is expected to be staged over the next two years, with full-in service in 3Q2020.

In addition, about 200 miles of pipeline would be constructed to provide crude oil deliveries into Cushing, OK.

In total, the combined pipeline system is expected to be capable of delivering up to 800,000 b/d of light crude oil and 150,000 b/d of heavy crude oil from points in Wyoming and Colorado to TGE’s and KMI’s Deeprock terminal in Cushing, OK. From there, customers would have pipeline connectivity to the Gulf Coast and export markets through Seahorse and other existing or proposed future pipeline projects. The combined project is expected to provide initial service as early as the second half of 2020.

“This combination of assets creates a significant growth opportunity for both companies,” TGE COO Bill Moler said. “Shippers benefit by gaining access to a pipeline system that can source from multiple basins and access numerous demand markets including existing refinery connections on Pony Express and Tallgrass’ downstream options. Other shipper benefits include a quicker in-service date and the ability to batch a greater variety of common streams.”

TGE is scheduled to report fourth quarter results on Jan. 31.