The newly formed joint venture Cimarron Express Pipeline LLC will serve crude oil producers in Central Oklahoma. Kingfisher Midstream LLC, a wholly owned subsidiary of Alta Mesa Resources Inc., Blueknight Energy Partners LP and affiliates of Ergon Inc. announced on May 10 the execution of definitive agreements to form Cimarron Express.
The venture will include the construction and operation of a new crude oil pipeline serving STACK producers in central Oklahoma with a 65-mile, 16-in. crude oil pipeline extending from northeastern Kingfisher County, Oklahoma, to Blueknight’s crude oil terminal in Cushing. The pipeline will provide direct market access at Cushing for producers and will have an initial capacity of 90,000 barrels per day (bpd), expandable to more than 175,000 bpd. The new pipeline is expected to be completed in mid-2019.
The ownership of Cimarron Express will be 50 percent Kingfisher Midstream and 50 percent Ergon. Ergon, owner of Blueknight’s general partner, will hold its ownership in Cimarron Express through a newly created, wholly owned subsidiary, Ergon – Oklahoma Pipeline LLC (Devco). Ergon and Blueknight also entered into an agreement that gives each party rights concerning the purchase or sale of Devco, subject to certain terms and conditions.
“We are pleased to be participating in this important project with a leader in the development of the prolific STACK production area in Oklahoma,” said Mark Hurley, CEO of Blueknight. “This pipeline will create a direct connection to our storage assets at our Cushing Crude Oil Terminal, enabling Alta Mesa Resources and other STACK producers to efficiently and safely move their production to the market. The addition of this pipeline underscores our commitment to work with exploration and production companies to build the needed infrastructure to support their capital investments.”
Concurrent with the formation of Cimarron Express, Alta Mesa executed a long-term acreage dedication and transportation agreement with Cimarron Express, which incorporates approximately 120,000 net acres in Kingfisher and Garfield counties in Oklahoma.
Under the terms of the agreement, Blueknight will construct and operate the pipeline. Also, Blueknight will continue to operate its existing crude oil storage facilities in Cushing. The receipt terminal for the Cimarron Express pipeline will be located at Kingfisher Midstream’s crude oil storage facility in northeastern Kingfisher County. The pipeline will connect to Kingfisher Midstream’s crude oil gathering system and truck unloading facilities at the company’s crude oil facility.
“We are excited to participate in this project which will provide direct market access to the Cushing Oil Terminal for STACK producers and afford them the opportunity to maximize the value of their crude oil production,” said Craig Collins, COO of Kingfisher Midstream. “We also see long-term value in this project for Kingfisher Midstream as we aggregate STACK oil volumes on our crude gathering system to deliver to Cimarron Express.”