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Shell unit signs 2 gathering agreements for Delaware Basin production

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Shell unit signs 2 gathering agreements for Delaware Basin production

A Royal DutchShell plc subsidiary struck two gathering and processing agreementsfor its operations in the Delaware Basin.

SWEPILP has entered into fixed-fee gathering and processing servicesagreements with Western GasPartners LP for a minimum of 20 years, with Shell dedicating gasfrom certain wells and acreage in the basin to Western Gas for the duration,according to a Sept. 27 news release.

The Shell unit has also signed a long-term agreement withCrestwood Equity PartnersLP for the construction, ownership and operation of a natural gasgathering system in Shell's operated position in the basin. Crestwood will ownthe system under its jointventure with its indirect general partner and largest unitholderFirst Reserve, according to Crestwood's Sept. 27 news release.

Shell may buy up to a 50% stake in the system before Sept.1, 2017.

The system has an initial in-service date of July 1, 2017and is expected to cost around $180 million. It is designed for about 250MMcf/d of gas production and includes 194 miles of low pressure gatheringlines, 36 miles of high pressure trunklines and centralized compressionfacilities, which can be expanded as production increases.

Shell has also allotted Crestwood about 100,000 acres andgathering rights in Loving, Reeves and Ward counties in Texas, for SWEPI gasproduction.

"With the financial structure from our joint ventureand the targeted in-service date for the new natural gas gathering system, weexpect the investment will be accretive to Crestwood as early as late 2017 and,in any event, fully accretive to Crestwood in 2018," said Robert Phillips,chairman, president and CEO of Crestwood's general partner.