On its surface, the development of small-diameter crude oil gathering pipeline systems in the Permian may seem like a ho-hum topic. In fact, though, these systems are at the heart of critically important strategies to ensure the reliable, low-cost flow of crude to multiple takeaway pipelines out of the basin, and thereby enhance the oil’s value and minimize financial risk. A case in point is the 50-mile-plus, 100-Mb/d-capacity gathering system that a producer/midstreamer joint venture has been building in the Delaware Basin along the Texas/New Mexico line. Today, we continue our series on Permian gathering systems with a look at WPX Energy and Howard Energy Partners’ new pipes in New Mexico’s Eddy County and Texas’s Loving and Reeves counties.
This is Part 6 in our series. Part 1 discussed the recently announced Beta Crude Connector, a 100-mile-plus, 150-Mb/d gathering 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 focused on 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. In Part 3, we looked at San Mateo Midstream’s crude gathering systems in the Delaware Basin — one in Eddy County, NM, and the other in Loving County, TX (the same areas we’ll be zeroing in on today) — and its 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. And in Part 5, we reviewed the approximately 200-mile Midland Basin gathering system that refiner Delek US has been developing to deliver locally produced crude to Delek’s Big Spring, TX, refinery — and others.
WPX Energy is an eight-year-old producer active in the Delaware Basin and in the Bakken; it entered the Delaware in August 2015 with the acquisition of RKI Exploration & Production. WPX currently holds about 130,000 net acres in the Delaware, operates more than 650 wells there and owns interests in another 800-plus, and produces about 90 Mboe/d (thousands of barrels of oil equivalent per day). In October 2017, WPX entered into an agreement with Howard Energy Partners (HEP) to jointly develop crude oil gathering infrastructure and natural gas processing plants in the Stateline area, which as its name suggests straddles the Texas/New Mexico border (south of Carlsbad, NM, and north of Orla, TX). HEP is a midstream company — also founded in 2011 — that owns a variety of gathering systems, processing plants and terminaling assets, primarily in Texas but also in the Marcellus in Pennsylvania. In addition, HEP is co-owner (with Grupo Clisa) of the 200-mile, 630-MMcf/d Nueva Era Pipeline, an important outlet for South Texas gas into northeastern Mexico that came online in June 2018.