Oil and gas pipelines to connect Permian Basin with Gulf Coast clears federal hurdle
A pair of pipelines intended to carry crude oil and natural gas liquids (NGLs) from the Permian Basin to exportation in the Gulf Coast cleared a federal hurdle this month, receiving a nationwide permit from the U.S. Army Corps of Engineers.
The move signified that all federal and state regulatory agencies approved of final construction for the lines, read a Feb. 6 news release from EPIC Midstream Holdings.
EPIC, based in San Antonio, Texas, formed in 2017 and Chief Executive Officer Phillip Mezey said its first two projects – the NGL and crude lines – are going according to plan.
“The issuance of the Corps permit further demonstrates our ability to safely and responsibly build these two pipelines and I would like to thank all stakeholders involved in the approval process,” he said.
The projects were backed by capital commitments from funds managed by California-based Ares Management, a private equity group.
“We are excited to be partnering with some of the leading energy companies in the world to develop these critical infrastructure assets,” said Nate Walton, partner at Ares Management.
Oil and gas producers Apache Corporation and Noble Energy signed on to anchor the pipeline last year, creating a total capacity of about 590,000 barrels per day.
Apache will have the option to acquire up to 15 percent of the equity from the oil line, while Noble could acquire up to 30 percent, and 15 percent of the NGL pipeline, per the respective deals until the first quarter of 2019.
“Partnering with Apache and Noble Energy adds tremendous strategic value to EPIC as we build out our crude footprint,” said Phillip Mezey, chief executive officer of EPIC Pipeline.
Apache has secured about 75,000 barrels per day of firm capacity, while Noble Energy purchased 100,000 barrels per day.
At least 10 percent of the system capacity will be reserved for uncommitted shippers, read the release.
In total, 500,000 acres were dedicated the project, which included donations from Apache and Noble Energy.
The pipeline will start in Orla, Texas, stopping at numerous terminals across the Lone Star State in Pecos, Saragosa, Crane, Wink, Midland, Helena and Gardendale.
The Port of Corpus Christi will also provide export capabilities, supporting the Delaware, Midland and Eagle Ford basins.
Supporting continued growth
New Mexico’s ability to move oil and gas to market is behind other oil-producing regions states such as Texas and Oklahoma, said Robert McEntyre, spokesman for the New Mexico Oil and Gas Association.
He said projects like the EPIC pipelines could continue the state’s momentum as oil and gas production grows in the Permian following a report from the U.S. Geological Survey that the largest reoccurring oil and gas resources was found in the region, and as New Mexico secured its place as the third-largest oil-producing state in the nation.
“Given the growth that we’ve seen, the need for these investments is tremendous,” McEntyre said. “It continues to grow. This is absolutely part of the solution to remove bottlenecks.”
The project and others like it, he said, are crucial to New Mexico’s continued growth in oil and gas production, he said.
“It will help get crude oil out of the Permian, and increase the takeaway capacity for natural gas,” McEntyre said. This will be much-needed capacity coming online when production needs to increase.
McEntyre said he did not expect much opposition to the project, as most of the land used for the project in New Mexico is public – either owned by the State or federal government.
He said state lawmakers and officials were supportive of the project, and its potential for continuing to encourage growth in the industry.
“It really only crosses state and federal land. Instead of hundreds of landowners, you have two,” he said. “There’s sentiment in Santa Fe that this is needed to keep increasing production. I think there’s a consensus that this will only help New Mexico, and help our production continue to grow and move forward.”
And the added capacity could also lead to more oil and gas companies investing in New Mexico, McEntyre said, even as some state lawmakers propose legislation that could be damaging – such as Senate Bill 458, a four-year moratorium on hydraulic fracturing.
The bill was tabled in the Senate Conservation Committee last week, as a report from the Legislative Finance Committee estimated it could cost New Mexico $3.5 billion in revenue over the four years of the ban.
“This will allow more companies to invest. It’s a win-win across the board,” McEntyre said of the project. “I don’t see much opposition in Santa Fe or the southeast.”
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Adrian Hedden can be reached at 575-628-5516, email@example.com or @AdrianHedden on Twitter.