Tallgrass Energy Partners LP affiliate Tallgrass Midstream LLC agreed Wednesday to purchase the Douglas natural gas gathering system in Wyoming’s Powder River Basin (PRB) from DCP Midstream in a deal valued at $128 million.
Leawood, KS-based Tallgrass expects the transaction to close by the end of June.
By acquiring the Douglas gathering system, the master limited partnership, which owns a combined 75% interest in the Rockies Express Pipeline both directly and through its privately held affiliate, would take control of roughly 1,500 miles of gathering lines stretching across four Wyoming counties. The acquired pipelines would serve as the primary gathering system for Tallgrass Midstream’s Douglas processing plant.
“This is a strategic acquisition that complements our existing assets in the region,” Chief Commercial Officer Matt Sheehy said. “The Douglas gathering system was originally designed to deliver gas to [Tallgrass Midstream’s] Douglas processing facility but was sold separately 15 years ago. We view this recombination as strategically important for our processing activities in the Powder River Basin.”
The latest acquisition comes after Tallgrass recently added a PRB water disposal facility through subsidiary BNN Water Solutions.
“The gathering system, when combined with our Casper and Douglas processing facilities, the residue lines feeding Tallgrass Interstate Gas Transmission, access to our water business services and assets and overall proximity to [crude oil pipeline] Pony Express, allows Tallgrass to offer a cost-effective one-stop-midstream-shop for producers in the Powder River Basin,” Sheehy said.
Management of the two companies approved the transaction, which is still subject to closing conditions.
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