Hess Midstream aims to establish itself as an independent midstream company operating in the Bakken and Denver-Julesburg basins as part of a recently announced restructuring with Chevron, Hess Midstream said in its quarterly earnings report published October 30.
Under the agreement announced October 6, Hess Midstream will pay $200 million to Chevron and acquire its DJ Basin gathering and storage assets, including a stake in the Saddlehorn crude pipeline. Chevron will surrender its ownership interest in Hess Midstream as part of the deal, which is expected to close by the end of the year.
“The addition of the DJ Basin assets is expected to significantly diversify and increase the footprint of our business, approximately tripling our crude gathering throughput and significantly growing our gas gathering throughput, while also broadening our asset base with ownership in a long-haul crude oil pipeline, all of which positions us well to capture future growth,” Hess Midstream CEO Jonathan Stein said in the October 30 earnings report. The company did not hold a quarterly earnings call after holding an investor call October 7 to discuss the Chevron agreement.
The DJ Basin assets to be acquired by Hess Midstream (see map below) are located primarily in Weld County, CO, and include about 400 Mb/d of oil-gathering capacity, 300 MMcf/d of gas-gathering capacity and 420 Mbbl of crude oil storage capacity. The assets also include a 20% stake in Saddlehorn, an approximately 600-mile, 300 Mb/d FERC-regulated crude oil pipeline that connects the DJ Basin to the Cushing, OK, storage hub. The DJ Basin assets are supported by approximately 670,000 dedicated acres, anchored by agreements with Chevron through 2045 and other counterparties.
The companies also agreed to reduce the tariff rates payable by Chevron for crude oil and gas gathering and processing services in the Bakken for the 2027-33 period and to extend the associated Bakken commercial agreements through 2045.
Source: Hess Midstream
