40 Miles from Denver, Part 6 - Outrigger Energy's D-J Basin Crude Gathering Systems

Transporting crude oil from the lease to refineries and export docks is like a long-distance relay race. The crude oil gathered from several wells is handed off to shuttle or takeaway pipelines, which then pass it on to regional crude hubs like Cushing, OK — from the hubs, crude is transferred to still other pipes. To get the relay going, the developers of crude gathering systems work closely with their takeaway pipeline counterparts to figure out the most efficient way to effect the first baton pass. Today, we continue our series on crude-related infrastructure in the Rockies’ Denver-Julesburg (D-J) Basin with a look at Outrigger Energy’s existing and planned gathering systems, and their connections to Tallgrass Energy’s still-expanding Pony Express takeaway pipeline.

D-J Basin crude oil production increased by about 100 Mb/d, or 20%, between January 2019 and January 2020, according to our friends at IHS Markit, and now consistently tops 600 Mb/d, making it one of the fastest-growing production areas in the U.S. As we said in Part 1 of our series on the play’s crude gathering systems, the D-J in northeastern Colorado and southeastern Wyoming offers an unusually intense concentration of hydrocarbons within four geologic layers, or “benches,” only a few thousand feet below the surface, as well as low per-well drilling costs and direct pipeline access to the crude oil hub in Cushing. We also noted that the vast majority of the basin’s production growth has been occurring in Weld County, CO. Lastly, we discussed the Black Diamond crude gathering system in Weld County that is co-owned by Noble Midstream Partners and Greenfield Midstream. Part 2 reviewed Noble Midstream’s nearby Wells Ranch, East Pony, Greeley Crescent and Mustang systems, and Part 3 considered the crude transportation network now being expanded by Taproot Energy Partners. In Part 4, we discussed the gathering systems, trunk lines and crude storage owned by ARB Midstream, and last time, in Part 5, we looked at Western Midstream Partners’ system.

Today, we turn our focus to existing and planned D-J gathering systems that are owned by Outrigger Energy — or, more specifically, Outrigger Energy II LLC — and by Extraction Oil & Gas’s subsidiary Elevation Midstream. We’ll start with Outrigger Energy. The second iteration of the privately held company was formed in early 2018 after the original Outrigger Energy LLC sold two midstream systems in the Permian Basin to Targa Resources and sold a 34-mile crude gathering system in the Powder River Basin in Wyoming to Tallgrass Energy. Both of those deals closed in 2017. The “new” Outrigger has targeted two other plays: the Williston Basin in North Dakota and the D-J Basin. In the D-J, Outrigger Energy II owns gas gathering systems, a 60-MMcf/d gas processing plant, and systems for gathering the produced water that emerges from wells with crude oil and associated gas, as well as the two crude gathering systems we’ll look at now.

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