Playbooks Supplements

Unconventional Yearbook 2018

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90 | January 2018 | hartenergy.com 2018 UNCONVENTIONAL YEARBOOK | MIDSTREAM Basin. Despite its name, Wildcat is anything but a risky venture. Quite to the contrary, it is an efficient application of existing but underused assets. "We contracted with Energy Transfer Partners for 400 million a day of capacity at their processing plant at Godley, Texas," Harris explained. "We tie that in from our Super Header in Oklahoma, and the residual gas hits the Texas intrastate system through the NorTex Tolar Hub. We see it as a cre- ative way to move gas from the Stack into North Texas while being very efficient with our capital dollars. It actually uses infrastructure that was built for the Barnett and is now underutilized. We gain 400 million a day of processing and access to a new market for our shippers, without having to build a plant and minimizing our pipe buildout." In the lower-for-longer reality, smart is the new rich. "For us it makes sense to make the most of existing assets rather than build new ones," Harris said. "That also keeps costs lower and improves netbacks to our producers. They like that, and that enables them to drill more. We continue to look for options that are not so obvious." The same applies for contracts. It has been mentioned by some acquisitive producers that leg- acy midstream contacts can be an impediment to upstream acquisition and divestiture activity. But Harris said that far from an opportunity to make a quick buck, a change in production ownership is an opportunity to make a new friend. "If a contract is in place there is certainty for both sides," Harris said. "We like that dedicated acreage to remain dedicated at known rates and terms of service. Especially if a large producer is selling non-core assets, it does not make sense for us to try to make big changes. The benefit to us is for the acreage to become productive sooner. Some private-equity-backed producers prefer to have their own gathering and processing rather than contract for it, but in the cases where the acreage is dedicated to Enable we like to think the opportu- nity is more than offset by Enable's reliability and market access." Toward the end of 2018 Enable will bring into service another example of making use of under-capacity assets. The CaSE project will bring 205 MMcf/d of residual-gas takeaway through inter- and intrastate pipe for Newfield Exploration in the Anadarko Basin. "We will be looping exist- ing pipe and adding compression," Harris said, "so it provides relatively quick access to market for the shipper." Rushing to Cushing Elsewhere in the Stack, Scoop and related Midcon- tinent plays there has been a significant increase in crude liftings, noted Greg Haas, director, Stratas Advisors, a sister company of Hart Energy. "Mean- ingful midstream expansion is needed there, and it is happening." Notably there is the Glass Moun- tain Pipeline to Cushing, Okla. Construction on a 44-mile pipeline extension of the pipeline is expected to be complete by year-end 2017 and operational by first-quarter 2018. Sem Group had been leading the project, and, in early November 2017, sold its half of the system to an affiliate of Black Rock. There is also a 50:50 joint venture expansion by Plains All Ameri- can and Phillips 66 into Cushing that was completed in November 2017. That project, called simply the Stack Pipeline, moves crude from the Sooner Trend, Anadarko Basin, Canadian and Kingfisher (Stack) counties in northwestern Oklahoma to Cushing. Plains contrib- uted an existing terminal at Cashion, Okla., with 200 Mbbl of crude storage and a 55-mile crude pipeline with a current capacity of 100 Mbbl/d. The system's connection to Cushing also provides another source of feedstock to Phillips 66's Ponca City refinery. "Combined those extensions and expansions are adding significant transportation capacity out of these plays," said Haas. "They are also mov- ing deeper into the western parts and connecting more of the regional plays. What is currently being planned will likely be sufficient mainline, long-haul capacity for the near term." That said, Haas cautioned that an old problem is rearing its head again: not getting barrels out of the basins and over to Cushing but getting out of Cushing and on to a consuming market. "There is a bottleneck developing similar to what we saw in the early part of the decade. Already a differential is re-emerging between WTI and Brent or LLS because of the pipeline constraints from Cushing to the refiners and export terminals of the Gulf Coast."

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