SemGroup, Chesapeake and Gavilon to build oil pipeline in the US

A subsidiary of SemGroup Corporation, an affiliate of Chesapeake Energy Corporation and commodity management firm Gavilon have formed a joint venture to build the 210 mile crude oil Glass Mountain Pipeline in Oklahoma, US.

The new pipeline will consist of two laterals with an initial capacity of 140,000 barrels per day and 440,000 barrels of intermediate storage.

One lateral will originate near Alva in Woods County, Oklahoma, and the other near Arnett in Ellis County, Oklahoma, with both intersecting near Cleo Springs in Major County and continuing east to Cushing.

SemGroup has not disclosed the project value, though the pipeline will end at Gavilon’s Cushing facility, the joint venture-owned crude oil storage facility with a capacity of one million barrels.

Chesapeake Energy said it has finalised a long-term transportation agreement with Glass Mountain Pipeline to provide the economic incentive to build the pipeline.

Rose Rock Midstream, SemGroup’s recently formed Delaware limited partnership, will operate the pipeline after completion.

Construction of the pipeline is scheduled to begin this year, with completion slated for the end of 2013.