Houston-based midstream Targa Resources Partners recently announced that it has entered into an agreement with Colorado-based Saddle Butte Pipeline to purchase 100 percent of Saddle Butte’s Williston Basin crude oil pipeline and terminal system as well as its natural gas gathering and processing operations for $950 million.
Saddle Butte was formed in 2009 as a privately held, full service midstream company that provided crude oil, natural gas, natural gas liquids and produced water services in the Williston Basin.
Its assets are all in McKenzie, Dunn and Mountrail counties of North Dakota, and include the two Saddle Butte terminals, one at Johnsons Corner Terminal, which delivers to Bridger Pipeline’s Four Bears line, and the other at Alexander, which delivers to Enbridge. Johnsons Corner had an initial storage capacity of 20,000 barrels but is being expanded to 40,000 barrels. Alexander has a storage capacity of 30,000 barrels.
With the Johnsons Corner expansion, Targa will have a combined crude oil operational storage capacity of 70,000 barrels.
Also included in the deal are approximately 155 miles of crude oil pipelines, including a trunk line running from the Fort Berthold reservation to Johnsons Corner and Alexander terminals, and approximately 95 miles of natural gas gathering pipelines. The Little Missouri gas processing plant south of Watford City is also included. The Little Missouri plant had an initial capacity of 25,000 cubic feet per day, but is currently being expanded to 40,000 cubic feet per day.
According to Targa, the Williston Basin operations are backed by producer dedications under long-term contracts that include approximately 260,000 acres of crude oil production and over 100,000 acres of natural gas production.
Targa said it expects growth capital expenditures of more than $250 million will be required in 2013 to support system expansions necessary to meet producer activity.
“This acquisition of a major, strategic midstream business complements our extensive portfolio of midstream assets, extends our footprint to the very attractive Bakken Shale play, further diversifies our business with the addition of crude oil gathering, and adds significant long-term growth in fee-based revenues,” said Targa Resources Partnership Chief Executive Officer Joe Bob Perkins. “We are very excited to expand our geographic footprint into one of the most important oil producing basins in the country. The visible, long-term growth potential of this business complements our attractive portfolio of ongoing and future organic growth projects and enhances the partnership’s longer term distribution growth.”
Saddle Butte’s subsidiary High Prairie Pipeline is a proposed 16-inch crude pipeline running from Alexander approximately 450 miles east to Clearbrook, Minn., where it was to connect with Enbridge. However, as Petroleum News Bakken reported in June, High Prairie has stated that Enbridge is refusing the Clearbrook interconnection. High Prairie filed one complaint with the Federal Energy Regulatory Commission in June and another in late November.
Targa Resources Partners LP is indirectly owned by parent company Targa Resources Corp., and is involved in gathering, compressing, treating, processing and selling natural gas and storing, fractionating, treating, transporting and selling natural gas liquids and NGL products. The partnership owns an extensive network of integrated gathering pipelines and gas processing plants and currently operates along the Louisiana Gulf Coast and in the Permian and Fort Worth basins.
Additionally, the partnership has NGL logistics and marketing assets located primarily at Mont Belvieu and Galena Park near Houston, as well as in Lake Charles, La. It also has terminals and transportation assets in Texas, Louisiana, the upper Midwest and eastern U.S., and a few as far west as Arizona, California and Washington state.
Prior to the Saddle Butte assets acquisition, Targa Resource Partners did not have assets in the Williston Basin.
—Mike Ellerd
