Apache building infrastructure with ARM partnership:
Apache Corp. has been doubly challenged as it develops its massive Alpine High discovery in Reeves County.
The first challenge is building out the infrastructure to support Alpine High. The company’s second challenge is moving its production to market through a severely constrained pipeline system.
To that end, Apache’s midstream subsidiary, Apache Midstream, is teaming up with ARM Energy Holding’s affiliate Salt Creek Midstream to develop the SCM Alpine system.
“The Salt Creek Midstream project is one of many infrastructure projects Apache has secured to move products from the Permian Basin. This specific project will move natural gas liquids from Alpine High to the Waha Hub where they will then be able to access Gulf Coast markets,” Brian Freed, Apache’s senior vice president, midstream and marketing, said in an email. “NGLs are anticipated to be a key production stream as the gas in the area is high BTU and liquids rich.”
He said Apache had anticipated the takeaway bottleneck “and proactively entered into gas basis hedges, long-term gas sales contracts and firm gas transportation commitments out of the Permian Basin on both existing and future pipelines. These measures provide flow assurance and protection of our price realizations and cash flow through mid-2019 when the Gulf Coast Express project, of which Apache is an Anchor shipper, is expected to come in-service.”
On the crude oil side, Apache has joined with Noble Energy in anchoring the EPIC Crude Oil Pipeline that will carry 590,000 barrels per day from the Permian Basin and Eagle Ford to Corpus Christi.
“We have dedicated Alpine High crude to that pipeline project,” Freed said. “But in addition, it gives us the ability to move our other in-basin crude oil production on the line – up to 75,000 barrels.”
As part of that partnership, Apache has the option to acquire up to 15 percent equity in the EPIC Crude Oil Pipeline and Noble the option to acquire up to 30 percent in the crude pipeline and up to 15 percent equity in the EPIC NGL Pipeline.
Apache has the option to acquire a 50 percent stake in SCM Alpine, a 445,000-barrel-per-day natural gas liquids header system. Construction is underway, and completion is expected in the first quarter of 2019. ARM Midstream Management will construct, manage and operate the $100 million project, which is supported by 10-year commitments from Apache and Salt Creek Midstream.
Salt Creek Midstream will be comprised of multiple cryogenic processing facilities as well as natural gas and crude gathering pipelines, compression and treating facilities serving Culberson, Pecos, Reeves, Ward and Winkler counties in Texas and Eddy and Lea counties in New Mexico.
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