ArcLight announces agreements for new crude oil systems

ArcLight Capital Partners, LLC announced today 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 in western Lavaca County capable of storing and blending crude oil volumes. The intermediate system will initially consist of a 12 in., 30 mile takeaway pipeline with initial capacity of 80 000 bpd 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 bothPenn 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 1300 remaining drilling locations in the acreage dedicated to Republic Midstream.

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 in., 30 mile takeaway pipeline with initial capacity of 80 000 bpd 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 bothPenn Virginia and third parties. Penn Virginia is currently operating five rigs in areas served by thegathering system with over 200 developed wells and over 1300 remaining drilling locations in the acreagededicated to Republic Midstream.

JP Energy will perform commercial services for Republic Midstream, including working with producers toprovide crude oilsolutions from the wellhead to the end market. JP Energy’s crude oil supply and logisticsdivision is active in marketing and transporting crude oil for producers in the Eagle Ford located nearRepublic Midstream’s CDP and intermediate system and has similar operations and commercial servicesin other major producing basins.

“ArcLight is excited to form a new venture managed jointly by two leading midstream operators –American Midstream and JP Energy – to leverage their existing footprints in the core of the eastern EagleFord Shale, a premier sub-play with some of the best drilling economics in North America” said DanielRevers, ArcLight’s Managing Partner. “With our equity commitment, experience in capitalising newventures, and the proven track record of our portfolio companies managing the entity, RepublicMidstream is positioned to become a critical infrastructure solution for Penn Virginia and other regionaloperators.”

“ArcLight is excited to form a new venture managed jointly by two leading midstream operators –American Midstream and JP Energy – to leverage their existing footprints in the core of the eastern EagleFord Shale, a premier sub-play with some of the best drilling economics in North America” said DanielRevers, ArcLight’s Managing Partner. “With our equity commitment, experience in capitalizing newventures, and the proven track record of our portfolio companies managing the entity, RepublicMidstream is positioned to become a critical infrastructure solution for Penn Virginia and other regionaloperators.”

“JP Energy has made the Eagle Ford a key area of focus with the intent to leverage our expertise indesigning crude oil solutions for producers from the wellhead to the end market. We are excited to usethe market knowledge we have gained through our existing operations in the Eagle Ford and in thePermian Basin to help create a comprehensive crude oil midstream solution for Penn Virginia,” stated J.Patrick Barley, Chief Executive Officer of JP Energy. “We expect that as Penn Virginia and other producers continue todevelop the eastern Eagle Ford, Republic Midstream’s locational advantages and broad range of logisticalcapabilities will prove immensely valuable to both the producer community and downstream players inthe crude oil markets.”

Adapted from press release by Hannah Priestley-Eaton

Read the article online at: https://www.worldpipelines.com/business-news/31072014/arclight-announces-agreements-to-construct-and-operate-new-crude-oil-systems/