Black Diamond Gathering, a joint venture between Noble Midstream Partners and Greenfield Midstream, is making moves to expand its operations throughout the United States.
Black Diamond, which provides crude oil gathering and storage services to producers in the Denver Julesburg (DJ) Basin, has entered into a new strategic relationship with Saddlehorn Pipeline Company. The partnership includes an option for up to a 20 percent ownership in Saddlehorn.
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 190,000 barrels per day of crude oil and condensate from the DJ and Powder River Basins to storage facilities in Cushing, Okla., owned by Magellan and Plains.
Noble Midstream said the company and Black Diamond made commitments during Saddlehorn’s recent open season. With the 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.
Black Diamond’s investment option expires in April 2020. The JV could potentially purchase the two 10 percent equity interests from Magellan and Plains, while WES would retain 20 percent ownership.
“Saddlehorn is an important long-haul outlet from the DJ and Powder River Basins with premier midstream equity partners and commitments from high-quality producers,” said Brent Smolik, CEO of Noble Midstream. “This opportunity is a natural expansion of Black Diamond’s strategic footprint, with the ability to realize economics further down the crude oil value chain while enhancing the all-in value proposition for our customers.
He added, “In addition, the new open season TSAs signed by Noble Energy and Black Diamond will include a tariff reduction to transport barrels to Cushing. We are excited by another potential long-haul pipeline investment and believe this opportunity reflects our strategic advantage and differentiated playbook for long-term growth and value creation.”
Black Diamond has also secured a 15-year oil gathering dedication from Verdad Resources, which would increase Black Diamond’s land by 85,000 acres, or 54 percent. It would also include more than 750 potential drilling locations in the DJ Basin in southern Weld County, Colo.
The buy would increase Black Diamond’s dedicated acreage to 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 is operated by Noble Midstream. The system includes a large-scale integrated crude oil gathering system in the DJ Basin, consisting of approximately 240 miles of pipeline, with 300 MBbl/d delivery capacity and 390 MBbl/d crude oil storage capacity.
According to Noble Midstream, 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. Noble’s 54.4 percent ownership of Black Diamond is held through its wholly owned subsidiary, Laramie River DevCo, while Greenfield Midstream owns 45.6 percent of the JV.
