Tallgrass Energy and Kinder Morgan will jointly increase existing crude oil takeaway capacity in the Powder River and Denver-Julesburg basins as well as add capacity to the Williston Basin and parts of Western Canada.
The agreement comprises existing and newly constructed assets. Tallgrass will contribute its Pony Express Pipeline System and Kinder Morgan will contribute portions of its Wyoming Intrastate Company and Cheyenne Plains Gas Pipeline and begin the process of conversion to crude oil service. In addition, 200 miles of new pipeline will be constructed to provide crude oil deliveries into Cushing, Oklahoma.
The combined pipeline system is expected to be capable of delivering up to 800,000 barrels per day of light crude oil and 150,000 barrels per day of heavy crude oil from points in Wyoming and Colorado to Tallgrass' and Kinder Morgan's Deeprock terminal in Cushing. From there, customers will have pipeline connectivity to the Gulf Coast and export markets through Tallgrass' planned Seahorse Pipeline and other existing or proposed future pipeline projects.
The combined project is expected to provide initial service as early as the second half of 2020.
Tallgrass' chief operating officer Bill Moler says: 'This combination of assets creates a significant growth opportunity for both companies. Shippers benefit by gaining access to a pipeline system that can source from multiple basins and access numerous demand markets including existing refinery connections on Pony Express and Tallgrass' downstream options.'
Don Lindley, chief commercial officer for products pipelines at Kinder Morgan, adds: 'There are a number of competitive advantages to jointly developing this project and leveraging Kinder Morgan's and Tallgrass' existing assets, including the expansion of our Double H Pipeline system. Chief among them is the ability to quickly and efficiently place an additional 550,000 barrels per day of crude transportation takeaway capacity in service from the Rockies, which helps domestic producers and offers near-term relief for Canadian producers.'
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