Midstream entities continue to partner with shale producers

By Luke Geiver | June 20, 2017

Midstream entities continued to find a healthy appetite from shale energy producers looking to deal. H2O Midstream has formed an agreement with Encana Oil & Gas Inc. in a deal that will allow the Houston-based firm to gather, dispose and deliver for re-use produced water for a large portion of Encana’s Permian acreage in Howard County, Texas. 

The midstream company will take ownership and operations of Encana’s existing water systems, including more than 100 miles of interconnected pipeline and five sale water disposal wells totaling 80,000 barrels per day of permitted disposal. 

H2O plans to add new produced water pipelines, more disposal wells and a state-of-the-art storage and re-use hub. 

Jim Summers, CEO of the midstream company, said they are happy to be selected as Encana’s long-term partner. “This acquisition fits perfectly with our strategy of building an expansive gathering, disposal and storage network to provide producers a full suite of midstream water services in the Permian Basin,” he said. The goal moving forward is to reduce the lease operating expenses for producers. 

A subsidiary of EnLink Midstream Co. is also excited for its announcement made this week. EnLink Midstream Partners has entered into a long-term, fee-based agreement with ONEOK Inc. to ship natural gas liquids from the SCOOP play in Oklahoma to EnLink’s Cajun-Sibon platform on the Gulf Coast. 

Through the agreement, EnLink will move its SCOOP-sourced NGLs to hubs in the Gulf Coast region by ONEOK’s Arbuckle and Sterling systems. The systems will be expanded by the end of 2018 to handle the additional volumes. EnLink will retain control of the NGLs. 

“We evaluated many options to move NGLs to the Gulf Coast, including building our own pipeline,” said Barry Davis, CEO of EnLink. “This deal was the most economic, secure and flexible.” 

Last week, Howard Midstream Energy Partners formed a deal with a Permian-focused operator to move oil and natural gas through a system that was orginally built by the operator.