Midstream services provider Tall Oak Midstream has secured a long-term, fee-based natural gas gathering and processing agreement with a natural gas producer in Oklahoma’s STACK play, the company said on Monday.
Under this agreement the undisclosed company has dedicated production from all existing and future wells drilled on 40,000 net acres located in Oklahoma’s Kingfisher and Blaine counties. The associated production will be gathered and processed at Tall Oak’s Chisholm Processing Complex, a cryogenic processing facility currently under construction in Kingfisher County.
The first cryogenic processing train at the Chisholm plant is expected to come into service in September 2015 with an initial capacity of 100 million cubic feet per day (MMcf/d).
Tall Oak has ordered a second cryogenic train that will add 200 MMcf/d of capacity, bringing the facility’s total processing capacity to 300 MMcf/d. The second train is scheduled to come online in the third quarter of 2016.
Future expansions at the Chisholm complex will allow for a total of 700 MMcf/d in processing capacity as customer demand increases.
Tall Oak is currently operating more than 100 miles of gathering pipelines in the STACK play and the company intends to complete an additional 100 miles of pipeline and two more compressor stations in 2015.
“Notwithstanding the current commodity price environment, the STACK play is one of the most economic plays in the country and continues to provide strong returns for our customers,” said Tall Oak’s chief commercial officer, Carlos Evans. “This important agreement strengthens our position in the Mid-Continent, where we remain very focused on deploying the necessary capital and developing the infrastructure needed to stay ahead of our customers’ immediate and long-term needs.”
Tall Oak also has plans for a crude oil gathering, storage and transportation system that will serve producers in the STACK play, anchored by a long-term agreement with Felix Energy.