Crestwood Equity Expands Role in Key U.S. Basins with More than $1 Billion in Projects

Researched by Industrial Info Resources (Sugar Land, Texas)--Crestwood Equity Partners LP (NYSE:CEQP) (Houston, Texas), which owns and operates midstream assets across some of the busiest U.S. shale plays, is looking forward to a prosperous 2019 as a series of acquisitions and expansions are expected to substantially increase its natural gas-processing capacity in the Permian, Bakken and Powder River Basins. Industrial Info is tracking more than $1 billion in active projects involving Crestwood and its subsidiaries.

Click on the image at right for a graph detailing Crestwood's active projects, by industrial sector.

Earlier this month, subsidiary Crestwood Niobrara LLC expanded Crestwood's role in the Powder River Basin with its acquisition of a 50% interest in Jackalope Gas Gathering Services LLC from Williams Companies Incorporated (NYSE:WMB) (Tulsa, Oklahoma) for roughly $485 million. Crestwood Niobrara fully owns Jackalope and has assumed full operations of the assets, which are in Converse County, Wyoming.

Powder River represents one of Crestwood's core growth areas, and the company believes the acquisition will double its position and make it the leading gathering and processing firm in the basin, with further opportunities for expansion. Crestwood already is nearing completion of its $20 million Train 2 at the Bucking Horse Natural Gas Processing Plant in Douglas, Wyoming, which would bring the plant's processing capacity from 120 million to 145 million standard cubic feet per day. For more information, see Industrial Info's project report.

Crestwood also is weighing a proposed, $100 million Train 3 at Bucking Horse, which is designed to add 200 million standard cubic feet per day. The company is preparing for its $1 million second-quarter turnaround at the plant, which would include normal inspections and repairs over the course of a week. Crestwood and Williams previously had been 50:50 joint venture partners in Jackalope, with Williams acting as operator and Crestwood performed commercial services. For more information, see Industrial Info's project reports on the proposed third train and turnaround.

"Recent industry research forecasts the Powder River Basin to be developed into a mature basin over the next five years, as the [basin's] Turner formation has been identified as a Tier 1 formation across all plays in the lower 48," Crestwood said in a quarterly press release.

In addition to the projected doubling of production in the Powder River Basin, Crestwood expects its production in the Permian Basin to jump 80% and the Bakken Shale to jump 55% through 2021. In the Permian, the company is proposing a $125 million second unit at its natural gas-processing plant in Orla, Texas, which would double the plant's capacity to 400 million standard cubic feet per day, and is weighing the possibility of a $125 million third unit to triple capacity. For more information, see Industrial Info's project reports on the second and third units.

"During the summer of 2019, our Chevron Phillips Chemical sales contract delivered through the EPIC [pipeline] system will reach a step up in volumes and a step down in price," said Robert Phillips, the chief executive officer of Crestwood, in a conference call with investors. "And we expect that CP Chem contract to drive incremental volumes through our Orla Processing Plant, as we'll then be able to offer our customers very favorable transportation and fractionation fees to get their NGLs to the Gulf Coast."

Crestwood's Arrow system in the Bakken completed 19 new well connections during the first quarter of 2019, and the company says it is on track to deliver about 100 new well connections by the end of this year, according to the press release. Crestwood also continued to develop its $125 million Train 2 addition at its Bear Den Cryogenic Natural Gas Processing Plant in Watford City, North Dakota, which will add 170 million standard cubic feet per day of processing from the Williston Basin, bringing the plant's capacity to 200 million standard cubic feet per day. Crestwood said the expansion also will provide the Arrow system with better flow assurance and broader access to premium-priced downstream natural gas liquid (NGL) markets. For more information, see Industrial Info's project report.

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