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Black Bear Midstream: dry gas deal

Published by , Senior Editor
World Pipelines,

Black Bear Midstream, a portfolio company of funds managed by Oaktree Capital Management, L.P., has announced that it entered into a contract to provide dry gas gathering service beginning in late 2018.

The six year agreement includes a significant volume commitment and extends Black Bear’s business beyond its core of natural gas processing.

Black Bear owns and operates a 140 million ft3/d cryogenic gas processing plant in Caddo Parish, Louisiana, high pressure gas gathering network and a 40 mile natural gas liquids pipeline that extends into DeSoto Parish, Louisiana.

“We are excited to expand our business to include dry gas gathering,” said Rich DiMichele, President and CEO of Palmilla Energy, LLC, which operates Black Bear on behalf of Oaktree. “There has been significant growth in dry gas drilling within our catchment area and producers are seeking reliable, scalable gas gathering service. Many of the older gathering systems simply were not designed for the type of growth experienced from Haynesville drilling.” DiMichele added: “We also have residue gas at the tailgate of the Black Bear processing plant that is ‘sweet’ and ‘dry.’ We are using this gas to blend with higher CO2 gas we typically see coming out of Haynesville wells. For many producers, we are a much cheaper option than treating alternatives.”

Black Bear also recently received approval to expand its gas processing plant by 200 million ft3/d. According to Travis Boeker, Palmilla EVP – Commercial there are a number of producers in East Texas and along the Louisiana state line that are drilling rich gas wells in response to increasing demand for NGLs, particularly ethane. “With ethane recoveries over 90% at our processing plant, Black Bear has a clear competitive advantage that creates significant value for its customers,” according to Boeker.

Boeker noted that new steam cracker capacity capable of consuming nearly 900 000 bpd of ethane is slated to come on line over the next several years. “Nearly all of the new cracker capacity is on the Gulf Coast, so we have a location advantage for delivering NGLs to these new world-class facilities.” Boeker also stated that producers are interested in gas residue markets that won’t be as severely affected by the glut of natural gas from the Permian and Marcellus. “We provide our customers with access to multiple gas residue markets today, and we expect to develop new options for Haynesville and Cotton Valley gas for LNG export.”

Black Bear Midstream is a gas gathering and processing company focused on providing midstream bespoke solutions for producers in Louisiana and east Texas drilling the Cotton Valley and Haynesville formations. The company has a high pressure gathering system providing dry and rich gas gathering with several interstate natural gas connections along with a 40 mile NGL pipeline connecting its 140 million ft3/d cryogenic gas processing plant to NGL markets in Mt. Belvieu, LA.

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