With Permian crude oil production now topping 4 MMb/d — and likely to surpass 5 MMb/d in short order — producers in the play are working closely with midstream companies to help ensure there is sufficient capacity in place to efficiently transport their crude from the lease to larger shuttle systems, regional hubs and takeaway pipelines. Sometimes, gathering systems need to be built from scratch, but in most cases, it is more cost-effective to expand existing systems that are already connected to key infrastructure downstream. Today, we continue our series with a look at a big pipeline network that NuStar Energy acquired two-plus years ago and has been expanding and improving ever since.
This is the 11th blog in this series on Permian crude gathering systems — and we’ve got a few more in the works! We started in Part 1 with a look at 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 considered another Midland-area system: Reliance Gathering’s 185-Mb/d pipeline network, which was originally developed to serve the affiliated producer Reliance Energy, but has since undergone a number of expansions to serve other producers too. Part 3 reviewed 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. Part 6 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, while Part 7 examined Oryx Midstream Services’ 860-mile Oryx Trans-Permian gathering and regional transport system. 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. Part 9 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 to be acquired by MPLX later this month. Last time, in Part 10, we discussed EnLink Midstream’s Greater Chickadee gathering system in the Midland and its Avenger system in the Delaware. One more thing: in our Happy Together blog last month, 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.
Today, it’s NuStar Energy’s turn. The San Antonio-based midstream company entered the Permian in a big way in May 2017 with its nearly $1.5 billion acquisition of Navigator Energy Services and what Navigator called the Big Spring Gateway (BSG) System — a large crude gathering system in the Midland Basin. BSG, which NuStar renamed the Permian Crude System (PCS; purple and green lines in Figure 1), started operating in 2015. At the time of NuStar’s purchase, the system included about 520 miles of pipelines capable of transporting crude oil mostly to the Colorado City hub, but also to the Midland hub and to Delek US’s refinery in Big Spring. The system — whose pipe mileage is mostly in Howard, Glasscock, Midland and Martin counties — also had about 120 producer tank batteries/receipt points, about 1 MMbbl of crude storage capacity, and about 500,000 dedicated acres.