Have It All, Part 10 - EnLink's Crude Gathering Systems in the Midland and Delaware Basins

A key to success for midstream companies developing crude oil gathering systems in the Permian is establishing strong, trusting relationships with the producers driving the region’s growth. Hitch your wagon to one or more producers with top-notch rock and aggressive expansion plans, develop gathering systems that meet their needs for flow assurance and destination optionality, and life will be good. Many of the midstreamers whose Permian gathering systems we’ve been discussing in our ongoing series have done just that. Today, we review the existing and planned systems of EnLink Midstream, another company whose growth is founded in large part on the relationships it has developed with major Permian producers.

This is the 10th episode in our series on Permian crude oil gathering systems. In Part 1, we examined the Beta Crude Connector, a 100-mile-plus, 150-Mb/d system that a joint venture of Concho Resources and Frontier Energy Services is developing in the Midland Basin to serve Concho and other producers. Part 2 looked at another Midland-area system: Reliance Gathering’s 185-Mb/d pipeline network, which was originally developed to serve the affiliated producer Reliance Energy, but which has since undergone a number of expansions to serve other producers too. Part 3 considered San Mateo Midstream’s crude gathering systems in the Delaware Basin — one in Eddy County, NM, and the other in Loving County, TX — and the company’s plans for two new systems on the New Mexico side of the state line. In Part 4, we turned to Medallion Midstream’s fast-growing, 1,000-mile crude oil gathering/header system in the Midland (which provides access to firm shippers serving 20 producers) and its 116-mile Delaware Express gathering/shuttle system in the southern Delaware. Part 5 focused on the 200-mile gathering system that refiner Delek US has been developing — also in the Midland — to deliver locally produced crude to Delek’s Big Spring, TX, refinery and others. In Part 6, we looked at the crude gathering system that a joint venture of WPX Energy and Howard Energy Partners (HEP) has been developing in the Delaware Basin’s Stateline area; that system currently includes more than 50 miles of pipe, with another 20-plus miles under construction. Part 7 reviewed the 860-mile Oryx Trans-Permian gathering and regional transport system, which Oryx Midstream Services has taken from initial concept to 23 producers and nearly 1 million dedicated acres in only five years’ time. In Part 8, we discussed 3 Bear Energy’s Hat Mesa Oil Gathering System, which over the past couple of years has grown to become a network of 200 miles of gathering lines and small trunk lines serving nine shippers in the northern Delaware Basin. And in Part 9, we reviewed the Permian gathering system owned by Andeavor Logistics, a master limited partnership (MLP) — currently owned by Marathon Petroleum Corp. (MPC, with a ~64% share) and investors (~36%), and soon to be acquired by MPLX. One more thing: In our Happy Together blog earlier this week, we looked at Salt Creek Midstream’s ongoing buildout of extensive gathering assets in the Permian — not just for crude, but for natural gas, NGLs and produced water.

EnLink Midstream was established in 2014 through the combination of Devon Energy’s midstream assets with Crosstex Energy. It started out as two publicly traded entities, with EnLink Midstream LLC (ENLC) serving as the general partner and EnLink Midstream Partners LP (ENLK) as the master limited partnership (MLP). As we said in a 2017 “Spotlight” report on EnLink with our friends at East Daley, EnLink’s initial core positions were in the Barnett Shale in North Texas, the Arkoma-Woodford Shale in southeastern Oklahoma, and natural gas and NGL infrastructure in southern Louisiana. Subsequently, EnLink added a major position in the STACK play in central Oklahoma, and developed new gas gathering and processing infrastructure — as well as new crude gathering infrastructure — in the Permian’s Midland and Delaware basins. In July 2018, Global Infrastructure Partners (GIP) purchased Devon’s stakes in ENLC and ENLK for $3.125 billion, giving GIP an approximately 41% ownership interest in EnLink. In January 2019, ENLC simplified its corporate structure by acquiring all outstanding common units of ENLK not already owned by ENLC in a unit-for-unit exchange transaction. With that deal, common equity in the MLP is no longer publicly traded. GIP continues to hold a ~41% stake in EnLink Midstream; the balance of EnLink’s units are publicly traded.

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