American Oil and Gas Reporter - June 2018 - 64

SpecialReport: Permian Basin Activity
and XTO Energy Inc.
Meanwhile, Crestwood has another
stand-alone system called the Nautilus
gathering system that handles all of Shell's
production in Texas' Loving and Ward
counties. According to Phillips, Shell has
100,000 acres, and Nautilus, which is
being designed to handle 250 MMcf/d,
is owned 50/50 by Shell Midstream and
a joint venture between Crestwood and
First Reserve.
The Nautilus system has been compressing gas and delivering it to thirdparty processors, but that is about to change.
Crestwood is building two high-pressure
pipelines, the Orla Express pipeline and
the Nautilus-to-Orla pipeline. According
to the company, the two lines combined
will be more than 60 miles of 20-inch pipe
connecting the Willow Lake system and
Nautilus gathering system to a new cryogenic processing plant at Orla in Reeves
County, Tx. It will feature 200 MMcf/d
processing capacity and is located across
the road from Enterprise Products' 200
MMcf/d facility. The new Orla plant, which
Phillips says is on pace to begin service in
July, is located in the heart of northern
Reeves County, the United States' most
active county for oil and gas activity.
"There are approximately 230 rigs
running within 25 miles of our new plant,"
Phillips marvels.

Right now, crude oil is being trucked
and NGLs are being sold locally, he says,
but Crestwood plans to offer three-phase
services at the wellhead, similar to what
it did several years ago in North Dakota's
Bakken play. "We are in discussions
about providing crude oil gathering, water
gathering and disposal systems, and crude
stabilization," he states. "We also have
moved some of our Crestwood trucks
from North Dakota into the Permian
Basin to handle the crude oil."
He notes the new Orla plant will connect at its tailgate to the El Paso Natural
Gas pipeline. The Willow Lake system
also connects to the El Paso transmission
pipeline.
When the Orla processing plant and
Orla Express pipeline are complete, Crestwood will have 650 MMcf/d of natural
gas gathering capacity, 255 MMcf/d processing capacity, 90 miles of pipe and
33,310 horsepower of gas compression,
Phillips calculates. Even so, he acknowledges, that will not suffice to handle the
Delaware Basin's projected growth.
"With the current rig count, we are
looking at 8 Bcf production," he explains.
"That is expected to peak at 14 Bcf-15
Bcf. The area is producing 1.0 MMcfe of
NGLs that is expected to grow to 1.5
MMcfe to 2.0 MMcfe in four-five years.
And crude oil production is forecast to

After receiving sufficient volume commitments, Phillips 66 Partners' Gray Oak Pipeline
began a second binding open season in late April, which the company notes will help
determine the pipeline's ultimate scope and capacity. Gray Oak is scheduled to begin
service by late 2019 and will provide crude oil transportation from West Texas to
destinations in Texas' Corpus Christi and Sweeny/Freeport markets, the company says.

64 THE AMERICAN OIL & GAS REPORTER

reach 2.5 MMbbl/d-3.0 MMbbl/d by 2020."
Phillips describes taking his company's
board of directors to the new Orla plant
construction site recently. During the tour,
he says, he made an important point. "We
are building a 50-year asset." he recounts.
"That will be unlocked only if we build
the infrastructure. As operators continue
to improve their completion technologies,
there is no telling what future production
and infrastructure needs will be."
Dual Projects
The crucial need for Delaware Basin
take-away capacity is prompting a number
of other pipeline projects and expansions.
"The Midland and Delaware basins are
near capacity," contends Jeff Dorrow,
vice president/commercial for EPIC
Pipeline LLC. "Barrels that can't go on
pipelines will have to go by rail or truck,
which is more expensive. These new
pipelines will help the basin move more
barrels, allowing producers to continue
to grow."
San Antonio-based EPIC Pipeline has
two projects going simultaneously that
eventually can take Permian Basin crude
oil around the world. It is building a
730-mile pipeline that has been sanctioned
to carry 590,000 bbl/d. "It will start at
Orla in Reeves County in the heart of
the Delaware Basin, and run through
(South Texas') Eagle Ford, picking up
Eagle Ford production," Dorrow explains.
"It is running to Corpus Christi, Tx.,
where it has the optionality of going to a
refinery, but it also is tying into a waterborne terminal and private dock we are
building, from which it can be loaded
onto a SuezMax ship that can carry 1
million barrels. From there, it can go
anywhere in the world."
EPIC's crude oil pipeline will have
five Texas terminals in the Delaware and
Midland basins, he reports. In addition to
the starting point in Orla, there will be
connections at Saragosa, which is dedicated
to handle Apache Corporation's new Alpine
High production, as well as connections
in Crane, Wink, and Midland. Dorrow
says all the terminals can be accessed by
gathering system or truck. Its new pipeline
also will have two Eagle Ford terminals
at Gardendale and Helena.



American Oil and Gas Reporter - June 2018

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