Noble Midstream Partners has revealed its plans to form a joint venture (JV) for a 152.8km long crude oil pipeline and gathering system in the Delaware Basin with Salt Creek Midstream.
The two firms have entered into a letter of intent to create the 50:50 JV for the crude oil pipeline and gathering system projects.
According to Noble Midstream, the newbuild pipeline system, with a capacity of 200,000 barrels of oil per day, will begin from Pecos County, Texas and have additional connections in Reeves County and Wink County in the same state.
Salt Creek CEO Zach Lee said: “We are excited to be working in partnership with the Noble Midstream team in the Southern Reeves area. We have known and respected the Noble Midstream team for some time and look forward to building a world class crude oil business with them as a partner in the Delaware Basin.”
The 20inch diameter crude oil pipeline has broken ground and is expected to be put into service in the second quarter of 2019. The pipeline project will have an expansion potential to 300,000 barrels.
Its footprint will be served by in-field crude gathering lines and a trunkline to Wink Hub.
The joint venture will be supported by acreage contributed by Noble Midstream and Salt Creek with the former giving nearly 180,000 dedicated acres. It is also backed by five other Southern Delaware Basin producers, with a line of sight to additional dedications totaling nearly 100,000 acres.
Noble Midstream and Salt Creek expect the execution of agreements and closing of the deal in the fourth quarter of 2018. For Noble Midstream, the investment in the crude oil project in the next five years is expected to be around $60-80.
Noble Midstream CEO Terry R. Gerhart said: “Since our IPO, we have continued to expand our Permian service offerings beyond infield gathering and have materially enhanced our third-party platform.
“These opportunities build on our strategy and provide Noble Midstream additional pathways to our stated goal of 50% net EBITDA contribution from the Permian by the end of 2020.”
Noble Midstream said that it has also reached a long-term agreement for the Advantage Pipeline system to cater to a producing company’s facilities in Southern Delaware, is expect. The Advantage Pipeline system is expected to commence operations next month.