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Unconventional Yearbook 2018

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92 | January 2018 | 2018 UNCONVENTIONAL YEARBOOK | MIDSTREAM at a cost of $160 million. The company said at the time of the announcement that the expan- sion "is supported by more than 200,000 acres of dedication, primarily fee-based contracts and minimum-volume commitments." The expansion of Canadian Valley, in conjunc- tion with the previously announced 200 MMcf/d firm offload agreement to a third-party processor, will take Oneok's total processing capacity in Okla- homa to 1.1 Bcf/d by 2019. Further, NGLs pro- duced from the expansion are expected to add 20 Mbbl/d of additional volumes to the company's existing Oklahoma liquids gathering system. Party like it's 2012 It's back to the future in the Permian, where midstream operators are racing to keep up with burgeoning production as if it were 2012. Brazos Midstream will bring its 200-MMcf/d Comanche II cryogenic gas processing plant in Reeves County, Texas, online in January 2018, a full month ahead of schedule. Comanche I, at 60 MMcf/d was brought into service at the end of 2016, and Comanche III, a twin of II, is now due to be started before the end of 2018. That also will be early. Separately, Lucid Energy Group planned to bring its 200 MMcf/d Roadrunner cryogenic plant in Eddy County, N.M., into service in December, a month ahead of schedule. The company is also con- sidering placing its next gas plant there, a possible change from the original plan to locate it adjacent to the Red Hills II plant, also a 200 MMcf/d, which was put into service in May in Lea County, N.M. It almost seems as if the play itself is playing with producers. At a time when domestic development budgets are being held to minimums, and global supply economics are still in surplus, producers have hardly been fostering higher production. Yet the Permian takes its moniker seriously: the gift that keeps on giving. "Speed is the critical consideration for us and for our producer counterparties," said Mike Latchem, president and CEO of Lucid. "That is all related to the success of the wells in northern Delaware, including the Wolfcamp, the Bone Springs and the Avalon. They are coming on so much stronger than the producers anticipated. That is a great problem to have." San Mateo, a joint venture of Five Point and producer Matador Resources, has plans to bring on a 200 MMcf/d processing plant early next year. "There is an incredible amount of wet gas in the Delaware," said David Capobianco, CEO and man- aging partner of Five Point. "The pace of produc- tion is not currently well understood, but it seems every new window and every new bench has great crude and massive gas. So much that in some zones it's hard to call it 'associated' gas." Regional oil refining demand, together with out-of-basin transportation come to about 2.6 MMbbl/d. Crude production is expected to out- pace existing takeaway capacity in 2018, but there is currently one pipe planned to be brought into service in the near term. Enterprise Products' Mid- land-to-Sealy line is expected to add an initial 300 Mbbl/d of new capacity by the middle of 2018. That line could be expanded by about half again as much with incremental debottlenecks. The same could be done on other existing lines, adding a further 300 Mbbl/d to 400 Mbbl/d of crude transportation. Another essential project for the Permian is Enterprise Product Partners LP's Midland-to- Sealy line that will move 450 Mbbl/d to Houston's doorstep, and also the Cactus line that will take 140 Mbbl/d to Corpus Christi. "In total there is about three quarters of a million barrels a day of new capacity to move Permian crude to Gulf Coast refiners or exporters. That should handle most of the growth. Cactus will also take Eagle Ford crude on its run from Gardendale, Texas, to Corpus Christi. That plus crude-by-rail should suffice for the Eagle Ford," Haas said. So close and yet so far The Appalachian regional midstream industry is a "conundrum," Haas at Stratas noted dryly. "There is the massive market in the Northeast and middle-Atlantic states, and virtually on their doorstep is the largest gas supply basin in North America. The trouble is that pipeline construction, even expansion of existing lines, is extremely difficult and expensive in densely developed areas. It is even more difficult for lines that cross multiple state lines." Still, there are expansions, if only in fits and starts, Haas added. He stressed the need to under-

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