By their very nature, crude oil gathering systems in the Permian are works in progress. They often start out small, serving only a few wells owned by a single producer — or maybe two or three. Over time, the systems typically branch out to serve more producers and more wells, and they add capacity as drilling activity picks up. Sometimes, they evolve into much larger systems with multiple gathering hubs and regional transport pipelines that shuttle large volumes of gathered crude long distances to big marketing hubs like Crane, TX, and Midland, where the oil can flow into any number of takeaway pipelines to Cushing or the Gulf Coast. Today, we continue our series on Permian crude gathering systems with a look at Oryx Midstream’s 860-mile gathering and regional transport network in the super-hot Delaware Basin.
In this series, we’ve discussed a broad range of Permian gathering systems: new and not-so-new, small and expansive, and in the Midland Basin and in the Delaware. In Part 1, we examined 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 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 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 — 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. In Part 5, we discussed 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. And last time, 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.
The focus of today’s blog is the Oryx Trans-Permian (OTP) gathering and regional transport system, which has been developed from scratch by Oryx Midstream Services over the past five years. In April 2014, Oryx Midstream received an initial commitment of $300 million from Quantum Energy Partners, Post Oak Energy Capital, Wells Fargo Energy Capital, Oryx management and other private investors to pursue midstream opportunities in the Permian, with an initial focus on the needs of three producers in the northern Delaware Basin. Since then, the system — still centered in the Delaware — has grown by leaps and bounds, to the point that Oryx Midstream is now the largest privately held crude midstream operator in the entire Permian. In April 2019, funds managed by Stonepeak Infrastructure Partners reached an agreement to acquire Oryx for $3.6 billion in cash — as good an indicator as any that the Oryx folks have built out an important and valuable system.