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Happy Together - Salt Creek Midstream's Integrated Permian Strategy

Permian midstream development activity has been happening at a rapid pace over the past few years, and we’ve featured many of those projects in the RBN blogosphere. One of the most aggressive players has been Salt Creek Midstream, which is in the midst of a big Permian buildout focusing on natural gas, crude oil, natural gas liquids and even produced water. Salt Creek isn’t only developing local midstream infrastructure; it’s also at work on long-haul solutions that will enable Permian producers to access markets along the Texas Gulf Coast — a wellhead-to-water strategy, you might call it. Helping Permian producers meet their needs to take away all three hydrocarbons plus produced water with integrated transport and pricing options is the key to Salt Creek’s effort. Today, we dive into the details of the company’s expansive Permian infrastructure development plan.

Salt Creek Midstream (SCM) is a joint venture formed by Ares Management and ARM Energy in mid-2017. Following an initial capital commitment from Ares, SCM soon became a minority partner in EPIC Midstream’s NGL Pipeline from the Permian to the Corpus Christi area (see Flick of the Switch for more on that pipe). Later in 2017, SCM contracted capacity on Kinder Morgan’s El Paso Natural Gas Pipeline (EPNG) Line 1600, which allowed the company to move gas volumes from the Permian’s Delaware Basin to western markets and the Waha Hub (see It Was Good Living With You, (W)aha for more on this important Permian gas hub). Also in late 2017, SCM made another investment in capacity, this time taking out a significant tranche of long-haul transport space on the EPIC Crude Pipeline (again, see Flick of the Switch). Further, the company had been signing producers to acreage commitments for gas gathering; it finished 2017 with five producers and over 175,000 acres dedicated to future SCM gathering and processing projects. After that auspicious start, Salt Creek has picked up the pace of commercial activity over the last 18 months, and now has more than 900,000 acres dedicated across its natural gas, crude oil and produced-water systems. Next, we break down the components of this massive buildout and Salt Creek’s strategy.

Natural Gas

Salt Creek has built out gas gathering systems (red lines in Figure 1) in Eddy and Lea counties in New Mexico, and Culberson, Reeves, Winkler, Ward and Pecos counties on the Texas side. The 325-mile network, about half of which is already in service, has pipe ranging from 8 to 30 inches in diameter and the capacity to transport up to 1.2 Bcf/d of rich gas to Salt Creek’s cryogenic processing plants, located near Pecos, TX, in Reeves County. There, the 200-MMcf/d Pecos I plant is currently in service; it will be joined in a few weeks by an additional cryogenic processing plant: the 200-MMcf/d Pecos II. Salt Creek is prepared to make a final investment decision (FID) on a third processing plant in the near term and has adequate site space to accommodate a total of up to 1.2 Bcf/d of cryogenic processing capacity.

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