Nuevo Midstream, LLC announced Monday that, with the addition of a recent 6,500-acre dedication in the Avalon Shale trend, the company has sufficient acreage, volume and well commitments to support the recommissioning of its refrigerated JT processing plant and fractionator near Orla, Texas.
Nuevo Midstream will also upgrade its Ramsey gas gathering system with increased treating and compression capacity, 11 miles of new eight-inch pipeline and a new interconnect with the Enterprise Products pipeline nine miles south of the plant, bringing the total system to 141 miles of high and low-pressure pipeline. The gathering system crosses through Eddy County in southeast New Mexico and Culberson, Loving and Reeves counties in west Texas and currently serves 38 natural gas producers.
The plant recommissioning and expansions to the Ramsey gathering system are expected to be complete by August 2011. The second phase of Nuevo's expansion plan anticipates the addition of 30 to 50 million cubic feet per day (MMcf/d) of cryogenic processing capacity at the Reeves County facility coming on line in October 2011. Drilling projections from numerous existing and potential customers are expected to support further system extensions and capacity upgrades.
"We are pleased to announce the first expansion of our Ramsey gas gathering system," said Jay Lendrum, Nuevo Midstream's president and CEO. "Recognizing the need for a rapid and robust response to the accelerating producer activity in the area, we have taken the first step in a planned, multiphase expansion to serve producers pursuing the liquids-rich Bone Springs, Wolfcamp and Avalon Shale plays and looking for the infrastructure and flexible downstream options they need to move gas to high-value markets. We are in advanced discussions with a number of producers regarding acreage and production commitments to support additional significant expansion of the processing and treating capacity of the Ramsey system as well as further extensions to our gas gathering lines with an ultimate goal of as much as 250 MMcf/d in total processing capacity serving these emerging plays."
Nuevo Midstream, LLC is a start-up midstream company headquartered in Houston. The company was formed with a $65 million commitment from EnCap Flatrock Midstream, a private equity firm based in San Antonio, Torch Energy Advisors Incorporated (Torch Energy) and Petroleum Fuels Company, Inc. (Petroleum Fuels). The commitment includes contributions of assets and management services by Torch Energy and Petroleum Fuels. Nuevo Midstream will focus its operations in the Permian Basin with emphasis on the Bone Springs and Wolfcamp formations and the Avalon Shale trend in southeast New Mexico and west Texas.
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