Paradigm Midstream Services to build new crude gathering system

By Patrick C. Miller | March 09, 2016

Paradigm Midstream Services–ND LLC has finalized an agreement with an undisclosed private company to construct a new crude gathering system in northern Mountrail County of the Bakken.

Paradigm Midstream is a wholly owned subsidiary of Paradigm Energy Partners LLC headquartered in Irving, Texas.

“We’re adding optionality and marketability for producers so that they can get the best netback for their barrel,” said Steve Koontz, Paradigm Energy’s executive vice president for corporate development.

“Our game plan is to connect to all the downstream markets and help facilitate more competition for the producers,” he continued. “It’s furthering our strategy of adding more gathering assets to our larger system, which adds a lot of storage and transportation to a lot of the different markets within the Bakken.”

Under the agreement—secured through an acreage dedication—the 23-mile-long gathering system will deliver approximately 17,000 acres of production from the Ross Field in northern Mountrail County to Paradigm Energy's joint venture rail terminal in Palermo, North Dakota.

From Palermo, producers will have access to East and West Coast markets via the BNSF Railway, as well as downstream markets near Stanley where Paradigm Energy has other pipeline connections.

"This is a substantial contract with a strong producer in a new area for Paradigm and supports our abilities as a preferred service provider,” said Troy Andrews, Paradigm Energy CEO.

According to the company, Paradigm Energy is focused on opportunities in Mountrail, McKenzie and Dunn counties to further enhance the value of its joint-venture rail terminal. In addition, Paradigm Energy is involved in the 91-mile-long Sacagawea Pipeline that connects markets in Stanley, Ross and Palermo with markets in Johnson's Corner near Paradigm's storage terminal in Keene.

The Sacagawea Pipeline and Keene Terminal are expected to be in service by the end of the third quarter of 2016. The Sacagawea Pipeline Co. LLC is a joint venture between Paradigm Energy and Phillips 66 Partners LP and Grey Wolf Midstream LLC.

"Expansion of our crude oil service offerings and gathering asset infrastructure into northern Mountrail County is a natural extension of our initial asset footprint,” Andrews explained. “This will be a significant area for Paradigm's future growth."

Koontz said Paradigm Energy sees the new project as a good long-term investment in the Bakken, despite the current low-oil-price environment. He also said the timing is right because the company has no debt and ample capital for expansion.

“We’re looking at this downturn as a great opportunity to go out there and expand when others are contracting,” he explained. “Producers see it as a great opportunity to lock in better pricing for their transportation. A lot of people have been coming to us knowing that we’re very active right now where others are sitting on the sidelines waiting for prices to cover.”

In January, the North Dakota Public Service Commission approved a siting permit for a $125 million pipeline to be built by Sacagawea Pipeline Co. that will carry Bakken crude under Lake Sakakawea. The Sacagawea Pipeline Project is a new 70-mile long, 16-inch diameter pipeline and associated facilities in McKenzie and Mountrail counties. The pipeline has a maximum capacity of 200,000 barrels per day with a normal throughput of 140,000 barrels per day.

Paradigm Energy is a full-service midstream services company that develops and operates new oil and gas infrastructure and related facilities. It focuses on developing midstream assets in the Bakken and Eagle Ford shale play in south Texas.


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