Houston Firm Buys $750 M ‘core of the core’ Bakken Asset

By The Bakken Magazine Staff | November 11, 2013

To purchase an asset in the core of the core of the Bakken shale play, Crestwood Midstream Partners had to spend $750 million. The investment landed the Houston-based unconventional shale midstream developer and asset manager a major crude oil, natural gas and water gathering system located on the Fort Berthold Indian Reservation.

The system includes more than 460 miles of gathering pipeline, which are the low pressure and flow pipelines that transport crude oil or natural gas from the production site (wellhead) to a central collection point. It features 150 miles of pipeline for crude oil, 160 miles for natural gas and 150 miles for water. Bob Phillips, president and CEO of Crestwood, said the company’s main goal is to own assets in the core of the core of the best shale plays in the U.S.

“If you look where our assets are [in the Bakken] we truly believe we are in the core of the core,” said Will Moore, senior vice president of strategy and corporate development. Earlier this year, Crestwood merged with Inergy LP, a move that added the Colt Hub in Epping, N.D., to the company’s list of Bakken assets. The Arrow facility is only 60 miles from the Colt facility. According to Moore, the company performed extensive research in the area of the CColt and Arrow facilities to better understand the potential for future production. “I can tell you that actual [production] has outstripped every production estimate that we looked at,” Moore said.

The Colt Hub is a rail transportation facility that moves Bakken crude to the East and West Coasts. Crestwood believes it will now be able to leverage its Arrow asset to increase the value of the Colt facility, as the Arrow facility will help the company to gather more crude to ship out of the Colt Hub.

According to Phillips, the Arrow facility was engineered with exceptional quality and current additions to the location are focused on compressor stations and pumps, not pipelines. Current work will also help to connect 234 wells to gas gathering systems, which he says will reduce flaring in the region.

The $750 million purchase has made Crestwood one of the largest Bakken midstream service providers in the play as the company now services 18 percent of total Bakken crude production. But, for Phillips, the recent purchase is a core element of another goal for the company. “This helps us in our goal of becoming investment grade at some time in the near future,” he said.