EPIC Crude Oil Pipeline Secures Strategic Partnerships

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EPIC Midstream Holdings LP announced May 10 that it has secured strategic partnerships for the EPIC Crude Oil Pipeline. The pipeline will run side-by-side with the EPIC Natural Gas Liquids (NGL) Pipeline for 730 miles, from southeastern New Mexico to Corpus Christi, Texas. The EPIC Pipelines are backed by capital commitments from funds managed by the Private Equity Group of Ares Management LP.

Apache Corp. and Noble Energy have committed to anchor the EPIC Crude Oil Pipeline, which will have an initial total capacity of 590,000 barrels per day (bpd) of oil, including 440,000 bpd from the Permian Basin and 150,000 bpd from the Eagle Ford. Apache and Noble Energy have secured 75,000 bpd and 100,000 bpd of firm capacity, respectively. More than 500,000 acres have been dedicated to the EPIC Crude Oil Pipeline, including dedications from Apache and Noble Energy. At least 10 percent of system capacity will be reserved for uncommitted shippers.

“Partnering with Apache and Noble Energy adds tremendous strategic value to EPIC as we build out our crude footprint,” said Phillip Mezey, CEO of EPIC Pipeline.

Additionally, EPIC is engaged in ongoing commercial negotiations representing at least 500,000 bpd in potential volume commitments and acreage dedications for the crude pipeline, in addition to 175,000 bpd capacity provided to Apache and Noble Energy. Pending the final result of the commercial process, the EPIC Crude Oil Pipeline may be upsized to a 30-inch line, expanding Permian Basin capacity from 440,000 to 675,000 bpd.

“As one of the largest acreage holders in the Permian Basin, Apache’s participation in the EPIC Crude Oil Pipeline helps to ensure takeaway capacity for our production from the region,” said Brian Freed, Apache senior vice president of midstream and marketing. “The partnership enhances our long-term operational flexibility and market optionality in our Delaware and Midland Basin focus areas.”

Freed also noted that the EPIC crude oil partnership aligns with previously contracted shipping from the region and complements the significant field infrastructure being built for the development of Alpine High, a world-class oil, natural gas liquids and gas field the company discovered in 2016.

“Noble Energy’s strategic agreement with EPIC provides long-term flow assurance for our rapidly growing Delaware Basin oil volumes. With this agreement, we have further diversified our onshore marketing outlets with access to the Gulf Coast and global markets,” said Gary W. Willingham, Noble Energy’s Executive Vice President, Operations.

As part of their EPIC strategic partnerships, Apache will have an option to acquire up to 15 percent of the equity in the EPIC Crude Oil Pipeline, and Noble will have an option to acquire up to 30 percent of equity in the EPIC Crude Oil Pipeline, as well as up to 15 percent of the EPIC NGL Pipeline. All options expire in the first quarter of 2019.

The EPIC Crude Oil Pipeline will extend from Orla,Texas, to the Port of Corpus Christi. The project includes terminals in Orla, Pecos, Saragosa, Crane, Wink, Midland, Helena and Gardendale, with Port of Corpus Christi connectivity and export access. It will service the Delaware, Midland and Eagle Ford Basins. Right-of-way is 100 percent secured for the first two phases of the system and construction is expected to commence in the fourth quarter of 2018. The crude system is expected to be in service in the second half of 2019.

The EPIC NGL Pipeline has previously signed definitive agreements with BP Energy Co. to anchor the pipeline and has also entered into a strategic arrangement with Salt Creek Midstream. Phase One of the EPIC NGL Pipeline is currently in operation, and it extends from DLK Black River Midstream to Delaware Basin Midstream. Phase Two, which will run from Delaware Basin Midstream to Benedum, Texas, is currently under construction with an expected in-service date of June 2018. Phase Three, which will run from Benedum to Corpus Christi is expected to be in service by the second half of 2019.

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