Tallgrass Energy, Kinder Morgan strike deal to increase crude oil capacity

Tallgrass Energy and Kinder Morgan struck a deal that will increase crude oil capacity at facilities in the Western United States.

As part of the deal, Tallgrass Energy would convert portions of its Pony Express Pipeline System to crude oil service, while Kinder Morgan would do the same with portions of its Wyoming Intrastate Company and Cheyenne Plains Gas Pipeline. Also, approximately 200 miles of new pipeline would be constructed to provide crude oil deliveries into Cushing, Okla.

The combined pipeline system is expected to deliver up to 800,000 barrels per day (bpd) of light crude oil and 150,000 bpd of heavy crude oil from points in Wyoming and Colorado to the Deeprock terminal in Cushing. From there, customers will have pipeline connectivity to the Gulf Coast and export markets through Tallgrass’s planned Seahorse Pipeline and other existing or future pipeline projects. The combined project is expected to be operational as early as the second half of 2020.

“This combination of assets creates a significant growth opportunity for both companies,” Tallgrass Chief Operating Officer Bill Moler said. “Shippers benefit by gaining access to a pipeline system that can source from multiple basins and access numerous demand markets including existing refinery connections on Pony Express and Tallgrass’ downstream options. Other shipper benefits include a quicker in-service date and the ability to batch a greater variety of common streams.”

The deal remains subject to receipt of the necessary state and federal regulatory approvals.

“There are a number of competitive advantages to jointly developing this project and leveraging KMI’s and TGE’s existing assets, including the expansion of our Double H Pipeline system,” Don Lindley, chief commercial officer for products pipelines at Kinder Morgan, said. “Chief among them is the ability to quickly and efficiently place an additional 550,000 barrels per day of crude transportation takeaway capacity in service from the Rockies, which helps domestic producers and offers near-term relief for Canadian producers.”