Lucid Energy Group announced July 9 that it has executed a new long-term natural gas gathering and processing agreement with XTO Energy Inc., a subsidiary of Exxon Mobil Corp.
Under the new agreement, XTO will deliver natural gas production from a portion of its leasehold position in southeastern New Mexico to Lucid’s South Carlsbad gas gathering and processing system. The agreement provides XTO with firm processing capacity and enables deliveries of gas and NGL to Exxon Mobil’s downstream and chemical manufacturing sites on the U.S. Gulf Coast. Lucid’s system in the northern Delaware Basin currently consists of more than 2,000 miles of pipeline spanning five counties in New Mexico and Texas.
Lucid also announced it is underway with the development of its next large cryogenic processing plant at its flagship Red Hills Natural Gas Processing Complex in Lea County, New Mexico. The Red Hills V plant will have the capacity to process 230 million cubic feet of natural gas per day (MMcf/d) and will bring the total processing capacity of Lucid’s natural gas processing franchise in the northern Delaware Basin to 1.2 billion cubic feet per day (Bcf/d). Lucid expects to commission Red Hills V in the second quarter of 2020. The expansion will follow the anticipated commissioning of the 230 MMcf/d Red Hills IV plant in October.
“We have continued to grow our relationship with XTO in the northern Delaware Basin since its entry into New Mexico,” said Lucid CEO Mike Latchem. “Lucid’s assets are strategically positioned for XTO’s development plans and complement what its affiliates are planning for midstream infrastructure within the basin and out of the basin to the downstream markets.”
Under the agreement, Bison will exclusively manage all of Marathon's produced water infrastructure, as well as any future acreage operated by Marathon within a 5.4 million acre dedicated area.
Once line fill is complete, commodities merchant Trafigura, one of the largest shippers on the line, will be shipping full contractual volumes, the source said.
The pipeline operator is in talks with NuStar Energy, which has a terminal at Corpus Christi, a NuStar spokesman confirmed. A deal could help address EPIC's storage shortfall as it works to construct its own terminal, traders said.