Hey Mr. D.J. Keep Playin' That Song! – Niobrara Denver-Julesburg Crude Takeaway Expansions

The Denver-Julesburg (DJ) Basin of the Niobrara shale in Northeast Colorado is one of the hottest crude plays around at the moment. RBN expects DJ Basin crude production to nearly double from 235 Mb/d in August 2014 to 450 Mb/d by the end of 2019 – an increase of 215 Mb/d. That growing production has sparked an infrastructure-planning spree with 4 pipeline project announcements in the last two months that could add a whopping 600 Mb/d of takeaway capacity from the DJ to Cushing by 2017. On top of that rail-loading capacity is also expanding in the DJ. Today we describe the new midstream expansion plans.

In Part 1 of this series we noted growing crude production in the Denver Julesburg (DJ) and Powder River Basin (PRB) plays in the Niobrara shale in Colorado and Wyoming - up 260 percent to 360 Mb/d since January 2012 and expected to double again by the end of 2019. Takeaway capacity from the region is congested because local Rockies production must compete with crude streams passing through the region from western Canada and North Dakota en-route to Cushing and points south. The new 230 Mb/d capacity Tallgrass Pony Express pipeline from Guernsey, WY to Cushing OK, expected online in November 2014 (delayed by technical issues from starting in September as originally planned), should relieve pressure on capacity out of the northern Niobrara PRB play. And the North East Colorado Lateral (NECL) to Pony Express, currently under construction and expected online in Q1 2015 will provide 90 Mb/d of new takeaway from the southern Niobrara DJ play to Cushing. Since we posted Part 1 last week, Tallgrass has announced plans to expand Pony Express, including the NECL with up to 400 Mb/d of additional capacity – 100 Mb/d in mid-2015 and the rest in 2016. Meanwhile DJ takeaway expanded this summer when the SEMGroup White Cliffs pipeline from Platteville, CO to Cushing doubled in size to 150 Mb/d. In this episode we look at plans to add as much as another 600 Mb/d of pipeline crude takeaway capacity from the DJ Niobrara play – including efforts to address the need to segregate increasing production of condensate - as well as new crude by rail loading capacity.

SEMGroup White Cliffs Expansion

SEMGroup continue to plan investment in and around their flagship DJ asset – the White Cliffs pipeline that is (as we said earlier) now expanded to 150 Mb/d between Platteville and Cushing. As we detailed in Part 1 SEMGroup has expanded gathering connections to the pipeline origin at Platteville for producer Noble Energy. They are also building four new truck unloading bays at Platteville and adding 100 MBbl of crude storage – work due to be completed during Q2 2015. On August 15 this year SEMGroup issued a press release stating they are considering a new pipeline from the DJ to Cushing. The new pipeline would possibly have multiple origin points in the DJ Basin and handle multiple grades of crude oil. At the same time they announced a non-binding open season to provide shippers an opportunity to express interest in making a long-term commitment to such an expansion of the White Cliffs pipeline system and to indicate preference for origin points. As yet there is no indication of potential capacity on the new pipeline but we would expect it to be at least as large again as White Cliffs (150 Mb/d). The map in Figure #1 shows the existing White Cliffs pipeline in solid red and the new proposal as a dashed red line.