Howard Energy Partners (HEP) signed a partnership agreement with WPX Energy (WPX) to develop crude oil and natural gas gathering and processing infrastructure in the core of the Delaware Basin.=
Operator HEP will complete construction of a 50-mile crude oil gathering system (initial construction already started by WPX), and build a 400 MMcf/d cryogenic natural gas processing complex and associated pipelines. The 50/50 joint venture is supported by an area of mutual interest of more than 600 square miles in Lea and Eddy counties, NM, and Reeves and Loving Counties, TX, with 50,000 net acres currently dedicated by WPX.
“Historically, producer-backed midstream companies have performed well given the strong alignment of interests,” said HEP Chairman and CEO Mike Howard “This joint venture not only diversifies HEP’s footprint into the most prolific basin in the nation, but it demonstrates our team’s ability to differentiate ourselves among our competitors and to raise significant capital for large-scale infrastructure projects.”
In a related move, WhiteWater Midstream will provide 300,000 MMBtu/d of natural gas transportation capacity from the Stateline area to Waha and grants WPX a 10% ownership interest in Agua Blanca. As part of the agreement, WPX has the right to increase its capacity to 500,000 MMBtu/d and its ownership up to 20%.
Agua Blanca will initially consist of 75 miles of 36-inch pipe with a capacity of 1.25 Bcf/d, expandable to 1.75 Bcf/d. The project is supported by substantial long-term, firm volume commitments. The initial path of Agua Blanca will be from Orla, TX to the Waha Hub, servicing portions of Culberson, Loving, Pecos, Reeves and Ward counties. Agua Blanca will have multiple direct downstream connections including to the Trans-Pecos Header.
Construction of Agua Blanca remains on schedule with the initial commissioning of the project expected during the fourth quarter of 2017 and the complete path from Orla to Waha operational by the end of the first quarter of 2018.