ArcLight Capital Partners to build and operate crude oil storage and transmission system
ArcLight Capital Partners, LLC announced that Republic Midstream, LLC, a newly-formed portfolio company, executed agreements with Penn Virginia Corporation to construct and operate a crude oil gathering system, a central delivery terminal complex and an intermediate takeaway pipeline to serve Penn Virginia’s prolific acreage position in the Eagle Ford Shale.
The long-term, fee-based transportation agreements with Penn Virginia are supported by minimum volume commitments and a dedication of acreage covering the areas served by the gathering system. ArcLight has committed US$400 million to Republic Midstream, which will be managed by two of ArcLight’s experienced midstream portfolio companies, American Midstream Partners, LP and JP Energy Partners LP. ArcLight currently expects to offer each company the right to purchase 50% of Republic Midstream after the commencement of operations.
The gathering system will initially consist of 180 miles of gathering and trunk lines located in north-central Gonzales and western Lavaca counties, which will deliver gathered volumes to a 144-acre central delivery point (CDP) in western Lavaca County capable of storing and blending crude oil volumes. The intermediate system will initially consist of a 12-inch, 30-mile takeaway pipeline with initial capacity of 80,000 barrels per day that will receive crude volumes via pipeline and truck at the CDP and deliver batched volumes to major long haul takeaway pipelines. The CDP and intermediate system are being designed to serve multiple market outlets and to accommodate various crude oil specifications from both Penn Virginia and third parties. Penn Virginia is currently operating five rigs in areas served by the gathering system with over 200 developed wells and over 1,300 remaining drilling locations in the acreage dedicated to Republic Midstream.
American Midstream will perform construction, operations and general management services for Republic Midstream. American Midstream currently owns and operates a gas gathering and redelivery system serving Penn Virginia in the same area in which the crude oil gathering system will be constructed. In addition, an affiliate of American Midstream’s general partner is currently constructing a full-well-stream gathering system for another Eagle Ford producer in Gonzalez County.
JP Energy will perform commercial services for Republic Midstream, including working with producers to provide crude oil solutions from the wellhead to the end market. JP Energy’s crude oil supply and logistics division is active in marketing and transporting crude oil for producers in the Eagle Ford located near Republic Midstream’s CDP and intermediate system and has similar operations and commercial services in other major producing basins.
