Blue Mountain Midstream LLC entered into a definitive agreement on July 17 with Roan Resources LLC to gather Roan Resources’ crude oil in the prolific Merge play.
The agreement provides for a 10-year term covering an 89,000 net acre dedicated area in nine townships in central Oklahoma. Blue Mountain plans to construct an initial crude system consisting of about 50 miles of gathering pipelines with two downstream interconnections providing anchor shipper Roan Resources with direct access to the Cushing market.
“Blue Mountain continues to grow our relationship with Roan Resources while expanding our scale and capabilities with this fully fee-based business line,” said Blue Mountain president and CEO Greg Harper. “By adding crude gathering, Blue Mountain can now provide our E&P customers a full suite of midstream services complementing our existing gas gathering and processing and water management services. We are excited to provide another commercial service that will positively impact the community by significantly reducing high volume trucking associated with Oklahoma’s oil production.”
The Blue Mountain system will initially be capable of transporting up to 60,000 barrels per day (bbl/d) of crude oil, but the ultimate system size and capital requirements will be determined following the contracting of additional shippers at the conclusion of an open season process. With the trunkline facilities designed within Blue Mountain’s existing asset footprint in the core of the Merge play, construction can commence immediately with initial commercial in-service beginning by year-end.
“We are excited that we are able to provide our current and future customers another value-added service that not only reduces their operating costs but also provides access to a market that will increase their economic net-backs,” Harper said. “Service diversification has been a keen focus as we continue to successfully execute our plan establishing Blue Mountain as a premier multi-service midstream company in the Merge/Scoop/Stack.”
Blue Mountain Midstream is a wholly owned subsidiary of Riviera Resources Inc.