Lucid Energy, other Permian midstreams secure long-term contracts

By Luke Geiver | September 05, 2018

The largest privately held natural gas processor in the Delaware Basin has signed a long-term agreement with Marathon Oil Permian LLC. Through the new contract, Lucid will expand its collaboration with Marathon by building more gathering and compression infrastructure across Marathon’s dedicated acreage in the New Mexico counties of Lea and Eddy.

“Marathon is a premier producer and a valued customer that we are fortunate to serve,” said Michael Latchem, Lucid CEO. “We are excited to see results from the world-class Delaware Basin continue to improve because of talented operators like Marathon.”

Part of Lucid’s goal is to stay in front of drilling programs, the company said. In Lea County, Lucid is commissioning a new cryogenic processing plant that has a 200-million cubic foot per day processing capacity. The plant, Lucid’s fifth in the Delaware, will push the company’s total processing capacity to 750 mmcf/d.

Natural gas quantities, including NGLs, are expected to more than double in the next four years, according to Jim Teague, CEO of Enterprise Product Partners LP, a major publicly traded provider of midstream services in the U.S. EPP recently announced plans to construct its tenth NGL fractionator in the Mont Beliveau, Texas, area. “This new fractionator will supply NGL products for the expanding petrochemical industry on the U.S. Gulf Coast as well as growing global demand for NGLs, Teague said.

The opportunity for continued build-out of midstream infrastructure and takeaway offerings was reason enough for EagleClaw Midstream to make a move to purchase Caprock Midstream Holdings. For $950 million, EagleClaw, a portfolio company of Blackstone Energy Partners, will receive Caprock’s gathering, processing and disposal services for natural gas, crude oil and produced water in the southern Delaware Basin.

“The acquisition of Caprock expands EagleClaw beyond natural gas gathering and processing related services into crude- and water-related services, providing opportunities for EagleClaw to offer a broad suite of midstream services to both existing and new customers,” the company said.

EagleClaw recently announced a partnership with Targa on the Grand Prix Pipeline Project and with Kinder Morgan on the Permian Highway Pipeline Project.