Tallgrass Energy LP and Silver Creek Midstream LLC are expanding their crude oil midstream joint venture in the Powder River Basin to add takeaway capacity to the Guernsey, Wyo., oil hub.
The Powder River Gateway LLC joint venture would own the Iron Horse pipeline, the Powder River Express pipeline and crude terminal facilities in Guernsey, according to an Oct. 15 news release. Under the agreement, Tallgrass would hold a 51% stake in Powder River Gateway and serve as the operator, while Silver Creek would own the remaining 49%. Financial details about the JV were not immediately disclosed.
The 80-mile, 16-inch Iron Horse pipeline is designed to carry about 100,000 barrels per day, expandable up to 200,000 bbl/d. It is under construction and is scheduled to begin service in the first quarter of 2019. The 70-mile, 12-inch Powder River Express pipeline has a capacity of 90,000 bbl/d, expandable up to 125,000 bbl/d. Both pipelines would deliver crude to Guernsey from Silver Creek's Pronghorn terminal in Converse County, Wyo.
The crude terminal facilities include ownership of more than 340 acres and 370,000 bbl of crude storage in service. When construction is completed, the facilities would have more than 1 MMbbl of storage.
At Guernsey, the Powder River Basin-produced crude would have access to Tallgrass Pony Express Pipeline LLC, which brings crude to the Cushing, Okla., oil hub, along with other takeaway pipelines. Powder River Gateway plans to create joint tariffs with Pony Express pipeline and Tallgrass' under-development Seahorse pipeline, which is designed to deliver up to 800,000 bbl/d of crude to a refining complex and export markets in St. James, La.
Including pending acquisitions, Silver Creek would own and operate 120 miles of existing pipeline and have over 330,000 acres of dedications from Powder River Basin producers. Silver Creek plans to add another 52 miles of crude pipelines and over 100,000 barrels of storage to its existing gathering and trunkline infrastructure in the fourth quarter.
Tallgrass is planning expansion projects for the Pony Express pipeline to accommodate increasing production in the Powder River Basin. The initial pump upgrades are expected to come online in 2018. An open season for additional capacity on the Pony Express pipeline out of Powder River Gateway's Guernsey facility is scheduled for November.