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Santa Fe Midstream breaks ground on natural gas facility in Permian Basin

Santa Fe Midstream has broken ground on a natural gas facility in the San Andres formation in the Permian Basin in West Texas.

The natural gas facility, which will come up near Denver City, will be used for natural gas gathering, treating and processing. Santa Fe says that the initial natural gas facilities will commence operations by the second quarter of next year.

The Texas-based Santa Fe is also building a crude oil gathering system in the region. Its natural gas and crude oil midstream facilities will be built in the Texan counties of Yoakum, Cochran and Gaines along with Lea County in New Mexico.

Santa Fe managing partner and founder Amer Rathore said: “Due to the increasing activity and rapid growth of the San Andres play in Yoakum, Cochran and Gaines counties, producers have expressed significant interest in new crude oil and natural gas gathering infrastructure.

“Santa Fe is pleased to provide the new facilities, best in class service and optimal netbacks as requested by producers in this area.”

According to Santa Fe, the facilities will initially cater to a considerable dedication from a major producer backed by a large energy private equity fund.

Santa Fe plans to deliver the residue from the natural gas processing and treating facilities to El Paso Natural Gas’ interstate pipeline. It will serve the WAHA hub in West Texas along with the natural gas markets in Western US.

On the other hand, the extracted natural gas liquids will be transported through Enterprise Products’ Chaparral Pipeline for delivery to Mt. Belvieu in Texas.

Santa Fe managing partner and CEO Greg Kegin said: “By connecting to multiple crude oil markets as well as premium natural gas and liquids markets, Santa Fe will provide the best possible netbacks for producers in the area.

“We look forward to supporting producers’ drilling plans by expanding our system.”

Earlier in the year, Santa Fe announced forming a joint venture with Vermilion Cliffs for the development of crude oil, natural gas and water midstream infrastructure in the Delaware Basin in West Texas.