A joint venture between Noble Midstream Partners and Greenfield Midstream, Black Diamond Gathering has entered into a new strategic relationship with Saddlehorn Pipeline Company, including an option for up to a 20 percent ownership in Saddlehorn.
The company has also added a long-term oil gathering dedication from Verdad Resources, increasing Black Diamond dedicated acres by approximately 85,000 acres, or 54 percent.
Saddlehorn Investment Option
As part of such strategic relationship, Black Diamond and Noble Energy Inc. made commitments during Saddlehorn’s recent open season. Black Diamond’s investment option expires in April 2020.
The Saddlehorn Pipeline, which is jointly owned by affiliates of Magellan Midstream Partners, Plains All American Pipeline and Western Midstream Partners, is currently capable of transporting approximately 190 thousand barrels per day (MBbl/d) of crude oil and condensate from the DJ and Powder River Basins to storage facilities in Cushing, Oklahoma owned by Magellan and Plains. With the recent successful open season, the Saddlehorn Pipeline will be expanded by 100 MBbl/d, to a new total capacity of 290 MBbl/d. The higher capacity is expected to be available in late 2020 following the addition of incremental pumping and storage capabilities. Magellan serves as operator of the Saddlehorn pipeline.
Upon an option exercise by Black Diamond, Magellan and Plains would each sell-down their equity interests in the Saddlehorn Pipeline to Black Diamond on an equal 10 percent basis while WES would retain its 20 percent equity ownership.
Long-Term Oil Gathering Dedication to Black Diamond
In addition, Black Diamond has secured a 15-year oil gathering dedication from Verdad Resources. The dedication encompasses approximately 85,000 acres and more than 750 potential drilling locations in the DJ Basin in southern Weld County, Colorado. This increases the total acreage dedicated to the Black Diamond system to approximately 243,000 acres.
Seven rigs are currently running on the Black Diamond dedicated acreage, including one rig on the Verdad acreage. Initial Verdad well connections are anticipated in early 2020. Black Diamond anticipates modest capital requirements in 2019 from the new gathering opportunity which can be absorbed within existing 2019 capital guidance provided at the Partnership’s second quarter earnings due to sustainable cost savings achieved this year.
Noble Midstream operates Black Diamond, which includes a large-scale integrated crude oil gathering system in the DJ Basin, consisting of approximately 240 miles of pipeline in operation, 300 MBbl/d delivery capacity and 390 MBbl/d crude oil storage capacity. The system is connected to every major takeaway pipeline in the DJ Basin, including the White Cliffs Pipeline, the Saddlehorn Pipeline, the Grand Mesa Pipeline, and the Pony Express Pipeline. The Partnership’s 54.4 percent ownership of Black Diamond is held through its wholly owned subsidiary, Laramie River DevCo LP. Greenfield Midstream owns 45.6 percent of Black Diamond.
For more information visit www.blackdiamondgathering.com