Black Diamond Gathering, the joint venture between Noble Midstream Partners and Greenfield Midstream, has formed a strategic relationship with Saddlehorn Pipeline Company.
The relationship includes an option for Black Diamond to take a 20% ownership in Saddlehorn. This investment option expires in April 2020. Black Diamond, which provides crude oil gathering and storage services to producers in the Denver Julesburg Basin, made commitments during Saddlehorn’s recent open season.
Saddlehorn can currently transport 190,000 barrels per day of crude oil and condensate from the DJ and Powder River Basins to storage facilities in Cushing, Oklahoma owned by Magellan and Plains.
Following the open season, the pipeline will be expanded by 100 mbbl/d and will have a new total capacity of 290 mbbl/d. This is expected to come online in late 2020. Upon an option exercise by Black Diamond, Magellan and Plains would each sell-down their equity interests in Saddlehorn to Black Diamond on an equal 10% basis while WES would retain its 20% equity ownership.
Brent Smolik, Noble Midstream’s CEO, says: ‘Saddlehorn is an important long-haul outlet from the DJ and Powder River Basins with premier midstream equity partners and commitments from high-quality producers. This opportunity is a natural expansion of Black Diamond’s strategic footprint, with the ability to realise economics further down the crude oil value chain while enhancing the all-in value proposition for our customers.
‘We are excited by another potential long-haul pipeline investment and believe this opportunity reflects our strategic advantage and differentiated playbook for long-term growth and value creation.’
Additionally, Black Diamond also added a 15-year oil gathering dedication from Verdad Resources, which comprises 85,000 acres and more than 750 potential drilling locations in the DJ Basin. This increases the total acreage dedicated to the Black Diamond system to 243,000 acres.