Saddlehorn Pipeline Co. LLC and Grand Mesa Pipeline LLC will construct a 20-inch pipeline to deliver crude oil from the Denver-Julesburg (D-J) Basin to storage facilities in Cushing, Okla. Saddlehorn announced the joint project on Nov. 18.
The joint-interest pipeline will begin about 20 miles north of Saddlehorn’s Platteville, Colo., origin at a junction near Grand Mesa’s Lucerne, Colo., origin.
Pipeline installation began in early October for the Platteville-to-Cushing segment, which is scheduled to be operational in mid-2016. Right-of-way acquisition is currently in progress for the Carr-to-Platteville segment, which should be operational in the fourth quarter of 2016.
The companies will share in the costs for the pipeline, which is currently being built. Its initial capacity will be about 340,000 barrels per day (Mbbl/d), with Saddlehorn owning 190Mbbl/d and Grand Mesa owning 150Mbbl/d.
Each company will be responsible for their own commercial activities, including customer relationships, contract terms and tariff structure.
Saddlehorn can expand the pipeline’s maximum capacity to more than 450Mbbl/d. Saddlehorn would own all of the incremental capacity from any expansion. Grand Mesa will retain ownership of its previously acquired pipeline easements from Lucerne to Cushing for the potential future development of transportation projects involving other petroleum commodities.
Saddlehorn will own origin points at Platteville, including 1MMbbl, and Carr, Colo., as well as the pipeline segment from Carr to the Lucerne junction. Grand Mesa will own origin points at Lucerne and Riverside, Colo., and the segment between Lucerne and Riverside.
Magellan Midstream Partners LP owns 40% of Saddlehorn; Plains All American Pipeline LP owns another 40% and Anadarko Petroleum Corp. (APC) owns 20%. Grand Mesa is fully owned by NGL Energy Partners LP.
Magellan is the pipeline system’s construction manager and operator. Saddlehorn will spend about $650 million for its share and the additional assets it will own.