Crestwood Equity Partners LP has entered into a long-term agreement with SWEPI LP, a subsidiary of Royal Dutch Shell plc, to construct, own and operate a natural gas gathering system in Shell’s operated position in the Permian – Delaware Basin. The system will be owned through Crestwood’s previously announced joint venture with First Reserve, Crestwood’s indirect general partner and largest unitholder, which was formed to finance and own midstream infrastructure in the Delaware Basin. Crestwood estimates the full build-out of the gas gathering system will cost approximately $180 million. Project development activities are underway with a targeted initial in-service date on or before July 1, 2017.
SWEPI LP will provide Crestwood with a dedication of approximately 100,000 acres and gathering rights for gas production across a large acreage position in Loving, Reeves, and Ward counties in Texas. The initial gathering system is designed for gas production of approximately 250 million cubic feet per day and will include 194 miles of low pressure gathering lines, 36 miles of high pressure trunklines, and centralized compression facilities which are expandable over time as production increases. Crestwood will provide gathering, dehydration, compression and liquids handling services on a fixed fee basis. Additionally, Shell has the option to purchase up to a 50 percent equity interest in the system prior to September 1, 2017.
Robert G. Phillips, Chairman, President and Chief Executive Officer of Crestwood’s general partner, stated, “We are pleased to enter into this important, long-term gathering agreement with SWEPI in the prolific Permian Basin where Shell has been developing its premier Delaware Basin acreage position since 2012. This agreement demonstrates Crestwood’s strong operating track record in the Marcellus, Bakken, Barnett and Delaware basins and our leading commitment to customer service, safe and reliable operations and environmental stewardship.”