Tulsa-based midstream energy company SemGroup Corp. announced Tuesday that it will form a joint venture to build a 210-mile oil pipeline from western and northern Oklahoma to the Cushing storage hub. Gavilon Midstream Energy LLC of Omaha, Neb., and a subsidiary of Chesapeake Energy Corp. will round out the joint venture group.
Construction on the pipeline will begin in July, with completion expected by the third quarter of 2013.
"This project will happen because of a spirit of cooperation among the three companies who each have unique capabilities," SemGroup CEO Norm Szydlowski said. "Together, we are leveraging these capabilities to solve a significant and growing crude oil transportation constraint in the state of Oklahoma."
The pipeline will include two laterals. One of those will start near Alva in Woods County and the second near Arnett in Ellis County before intersecting near Cleo Springs in Major County and continuing east to storage in Cushing. Transport capacity on the pipeline will be 140,000 barrels per day early on, with a maximum reaching 180,000 barrels.
The joint venture also will build a 1-million-barrel storage facility at the crude oil hub about 60 miles west of Tulsa. The pipelines will offer takeaway options for crude oil producers in western Oklahoma and the growing Mississippi Lime trend in northern Oklahoma and southern Kansas. "Strong crude prices continue to provide attractive economics for producers in these plays," said Mike Stice, senior vice president of Oklahoma City-based Chesapeake, in a statement.
"This pipeline will further improve the upstream economics of Chesapeake Energy Corp. by providing a lower-cost transportation alternative to move production from the field to downstream markets at the Cushing interchange."
Copyright 2012 The Tulsa World.
(Originally published February 22, 2012, in The Tulsa World.)