An affiliate of Enterprise Products Partners LP has agreed to acquire Piñon Midstream LLC for $950 million, expanding its natural gas processing footprint to the eastern flank of the Delaware Basin in New Mexico and Texas.
Piñon Midstream, a portfolio company of Black Bay Energy Capital, has approximately 50 miles of natural gas gathering and transmission pipelines, five 3-stage compressor stations, 270 MMcfd of existing H2S and CO2 Wastewater treatment plants with a capacity expansion to 450 million cubic feet per day, expected to be completed in the second half of 2025, as well as two of the highest-capacity and deepest acid gas injection wells (about 18,000 feet) below the surface in the basin, Enterprise said in an Aug. 21 news release (OGJ Online, June 23, 2023).
As part of this transaction, Enterprise is evaluating locations for a third injection well that would support a total processing capacity of up to 750 MMcfd.
“We believe the Piñon management team has developed the leading sour natural gas processing system in the Delaware Basin,” said AJ “Jim” Teague, co-managing director of Enterprise’s general partner, in an Aug. 21 press release, noting that the acquisition accelerates the company’s entry into the region “by at least 3-4 years.”
The deal is supported by fee-based contracts with long-term acreage allocations, including minimum volume commitments, Enterprise said. In addition, Piñon Midstream’s monitoring, reporting and verification plan for CO2 Sequestration in its two Devonian acid injection wells at the Dark Horse Wastewater Treatment Plant in Lea County, NM, was approved by the Environmental Protection Agency in June 2024 (OGJ Online, June 18, 2024).
Enterprise estimates that this area of the Delaware Basin, which consists largely of Lea County, NM, and Winkler County, Tex., has over 7,500 remaining drilling locations and access to at least six geological producing benches. Drilling activity in this area has generally been limited due to a lack of sour natural gas processing and sour gas injection capacity, as well as the lengthy permitting process for sour gas injection wells, which can take up to two years.
Subject to customary regulatory approvals, the transaction is expected to close in the fourth quarter of this year.
