Tallgrass Energy Partners acquires oil gathering system in US
Midstream energy operator Tallgrass Energy Partners, through its subsidiary Tallgrass Midstream (TMID), has acquired Outrigger Energy’s crude oil gathering system in the Powder River Basin, US, for about $36m.
The acquisition comprises 34 miles of gathering lines and around 150,000 acres dedicated on a long-term fee-based contract.
It is expected that Tallgrass will incur a cost of approximately $7m in additional capital expenditures on the Outrigger system for the rest of the year.
Tallgrass Energy Partners chief operating officer Bill Moler said: “This is another strategic acquisition that complements our existing processing, natural gas gathering, transportation and water assets in the region and enables us to provide additional services for producers in the basin.
“With the early, but very encouraging, well results from producers, the Powder River Basin is a strategic focus for Tallgrass.
“This acquisition expands our footprint in the region and provides another direct supply source for Pony Express.”
Following the acquisition, Tallgrass Interstate Gas Transmission (TIGT), which operates as a subsidiary of Tallgrass Energy Partners, is set to sell an under-utilised segment of its system from Labonte to Guernsey, Wyoming to TMID, which will subsequently convert it into crude oil service.
In addition, TMID will take up the construction of associated facilities to establish a new crude oil line from Labonte to the Outrigger system, as well as additional laterals into other producing areas in the Powder River Basin.
The project will ultimately lead to direct access for producers on the Outrigger system to Tallgrass Pony Express Pipeline’s crude oil pipeline system.