Black Bear Midstream announced on Sept. 10 that it entered into a contract to provide “dry” gas gathering service beginning in late 2018. The six-year agreement includes a significant volume commitment and extends Black Bear’s business beyond its core of natural gas processing.

Black Bear owns and operates a 140 million cubic feet per day (MMcf/d) cryogenic gas processing plant in Caddo Parish, LA, high pressure gas gathering network and a 40-mile NGL pipeline that extends into DeSoto Parish, LA.

“We are excited to expand our business to include dry gas gathering,” said Rich DiMichele, President and CEO of Palmilla Energy, LLC, which operates Black Bear on behalf of Oaktree Capital Management. “There has been significant growth in dry gas drilling within our catchment area and producers are seeking reliable, scalable gas gathering service.”

Black Bear also recently received approval to expand its gas processing plant by 200 MMcf/d. According to Travis Boeker, Palmilla EVP – Commercial there are a number of producers in East Texas and along the Louisiana state line that are drilling rich gas wells in response to increasing demand for NGL, particularly ethane.

“With ethane recoveries over 90% at our processing plant, Black Bear has a clear competitive advantage that creates significant value for its customers,” Boeker said.

Boeker noted that new steam cracker capacity capable of consuming nearly 900,000 barrels per day of ethane is slated to come on line over the next several years. “Nearly all of the new cracker capacity is on the Gulf Coast, so we have a location advantage for delivering NGL to these new world-class facilities,” he said.

Boeker also said that producers are interested in gas residue markets that won’t be as severely affected by the glut of natural gas from the Permian and Marcellus. “

We provide our customers with access to multiple gas residue markets today, and we expect to develop new options for Haynesville and Cotton Valley gas for LNG export,” Boeker said.