American Oil and Gas Reporter - June 2015 - 59

SpecialReport: Permian Basin Update

Midstream Keeps Pace With Demand
By Danny Boyd
Special Correspondent

Regardless of price fluctuations, it remains clear that Permian Basin operators
continue to look to ongoing expansions
in gathering systems and pipelines to
provide additional market access for oil
production that is expected to keep climbing over the long haul.
Permian crude oil production increased
30 percent, to 1.85 million barrels a day,
from December 2013 to December 2014,
according to the U.S. Energy Information
Administration. But with some longer
term forecasts estimating Permian
production of 2.5 MMbbl/d by 2020,
more take-away capacity will be needed
in addition to projects already under way
to expand capacity and solve pricing bottlenecks.
All that new oil production includes
plenty of natural gas as well, and midstream companies are constructing processing plants, gathering systems and
trunk lines expected to give Permian producers greater access to markets in the
United States and Mexico.
Crude Oil Outlets
Dallas-based Navigator Energy Services LLC is enhancing its Big Spring
Gateway Pipeline system to provide additional outlets for Permian Basin crude
oil to Gulf Coast and Mid-Continent markets, says Chief Commercial Officer Matt
Vining. The system, which spans Martin,
Howard, Glasscock and Midland counties
in the heart of Texas' Midland Basin, is
expected to be in service the second half
of this year, he adds.
The BSG upgrades include increasing
capacity from 75,000 to 140,000 barrels
a day, Vining details, along with adding
more than 250 miles of gathering pipeline,
200 miles of transportation mainline,
seven truck injection stations, and 225,000
barrels of planned storage capacity.
"We almost doubled capacity because
there was enough demand and we are
able to increase our interconnectedness,"
Vining explains. "The thing that really
drove demand for us is we offer connections from a variety of points to a variety
of points."
He says the availability of more outlets
means crude oil producers have additional
price options through hubs in Longview,

Nederland and Houston, Tx. The system
will offer delivery into the BridgeTex
Pipeline as well as Sunoco-operated lines
near Colorado City, Tx., providing West
Texas producers a direct path to 900,000
barrels a day of take-away capacity to
the Texas Gulf Coast and Mid-Continent,
Vining points out.
The company expanded an open season
at the end of March to complete several
contracts, but shippers are in place and
Vining says Navigator anticipates launching the $250 million project.
Delaware Basin Take-Away
The Permian Basin oil boom has been
accompanied by additional natural gas
production, leaving many producers needing more sales outlets. Vaquero Midstream
is helping resolve this dilemma with its
gas gathering and processing project expanding take-way in the Southern
Delaware Basin, including giving operators
the ability to ship gas into Mexico, says
President and Chief Executive Officer
Gary Conway.
Construction was scheduled to begin
this month on a 200 million cubic-foota-day cryogenic unit in Pecos County,
Tx., close to the Waha Hub and the Lone
Star NGL pipeline, he says.
According to Conway, Vaquero plans
to establish an extensive gas gathering

footprint in the area with more than 100
miles of high-pressure, eight- to 30-inch
pipeline connected to central delivery
points on producers' acreage blocks. The
company plans to complete constructing
the plant and gathering system over the
next 12 months, and to have the complex
in operation by mid-2016, he says.
The Vaquero system is intended to
serve operators who consistently have
voiced the need for larger, high-pressure
gathering lines, Conway remarks. "This
allows producers in the Southern Delaware
Basin to get into a larger high-pressure
line that suffices not only for capacity,
but for the pressure rating that is needed
in this area," he reflects. "It's a real infrastructure upgrade and solves a basin
problem."
Additional market access from Waha
is equally appealing, Conway continues,
from where operators may sell residue
gas not only domestically, but into Mexico
as long-haul transmission companies work
on expanding their Permian Basin
pipelines to connection points along the
Mexican border. He says the Lone Star
NGL line provides access for liquids
sales and to fractionation at Mont Belvieu,
Tx., where most producers may negotiate
their own fractionation agreements.
"West Texas seems to be have ample
natural gas supplies with the industry's

Canyon Midstream Partners' James Lake system includes a 105 million cubic-foot-a-day
cryogenic gas processing plant in Ector County, Tx., capable of treating sour gas. It is
connected to six field compressors, 60 miles of 12-inch trunk line, and 20 miles of lowpressure gathering lines in Ector and Andrews counties.

JUNE 2015 59
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