Lucid and XTO Energy sign gas gathering and processing agreement

Natural gas processor Lucid Energy has signed a new long-term natural gas gathering and processing agreement with ExxonMobil subsidiary XTO Energy.

Under the agreement, natural gas production will be delivered from a part of XTO’s leasehold area in southeastern New Mexico to Lucid’s South Carlsbad gas gathering and processing system.

XTO will also be able to increase its processing capacity and can deliver gas and natural gas liquids to ExxonMobil’s downstream and other chemical manufacturing sites located on the US Gulf Coast.

Lucid’s system in the northern Delaware Basin contains more than 2,000 miles of pipeline covering five counties in New Mexico and Texas.

It also announced the continuation of the development of its next large cryogenic processing plant at Red Hills Natural Gas Processing Complex in Lea County, New Mexico.

With a processing capacity of 230MMcf/d, the Red Hills V plant will increase the total processing capacity of Lucid to 1.2bcf of natural gas a day.

Lucid plans to commission the plant in the second quarter of next year, followed by the anticipated commissioning of the 230MMcf/d Red Hills IV plant in October.

Lucid Energy CEO Mike Latchem said: “We have continued to grow our relationship with XTO in the northern Delaware Basin since its entry into New Mexico.

“Lucid’s assets are strategically positioned for XTO’s development plans and complement what its affiliates are planning for midstream infrastructure within the basin and out of the basin to the downstream markets.”

The company provides midstream services to producers working in the Midland and Delaware Basins.