[Context: On March 6, Energy Spectrum-backed Velocity Midstream announced completion of a crude oil pipeline for the SCOOP play and another pipeline connecting the Merge play to the SCOOP. Further details and related links are below.]
Velocity Midstream Partners Announces the Completion of Its 12″ Crude Oil Pipeline Loop through the SCOOP Play and the Construction of a 12″ Merge Pipeline Extension with Connections to CVR Refinery and Cushing
TULSA, Okla., March 6, 2018 /PRNewswire/ — Velocity Midstream Partners, LLC (“Velocity”) announced that it has completed the construction of a 45-mile, 12″ crude oil pipeline loop of its existing condensate pipeline through the fairway of the South Central Oklahoma Oil Province (“SCOOP”). The crude oil loop project is supported by expanded commitments from Continental Resources Inc. (NYSE: CLR)a, an Oklahoma City-based exploration and production company, and CVR Refining, LP (NYSE: CVRR) (“CVR”).
Velocity also announced that it has started construction of a 22-mile, 12″ crude oil pipeline extension linking the core of the Merge play to its SCOOP pipeline assets. The Merge pipeline will be placed into operation in April 2018. Along with these new pipelines, Velocity also announced the completion of a Joint Tariff agreement with Plains All American Pipeline, L.P. (NYSE: PAA) (“Plains”) providing storage and segregated, batched crude transportation to PAA’s Cushing terminal.
In addition to the new pipeline projects and transportation arrangements, Velocity has acquired 100% ownership of all of the truck unloading terminals along its pipelines and has expanded and added terminals to provide attractive locations for SCOOP and Merge producers. Upon completion of its Merge terminal just west of Tuttle, OK, Velocity will have six unloading terminals operating 24/7 across the two plays with segregated unloading and storage for crude oil and condensate. Velocity is in discussions with producers to construct an additional 15-mile pipeline extension and a new terminal in central Canadian County.
Velocity’s system is now comprised of 125 miles of pipeline capable of flowing 250,000 barrels per day, along with 395,000 barrels of storage and 26 truck unloading bays capable of unloading greater than 100,000 barrels per day. The new crude oil pipeline enables producers in the SCOOP and Merge to segregate their heavier crude barrels produced from the Springer, Sycamore, Meramec and Woodford oil formations from the lighter barrels being produced from the Woodford condensate formation. These segregated pipelines allow Velocity to transport different quality “neat barrels” from the wellhead to premium markets, thereby preserving the best possible pricing for its producer clients.
Velocity’s crude and condensate pipelines lie through the core of the SCOOP and Merge plays, allowing Velocity to provide cost effective gathering solutions to producers regardless of crude gravity. Velocity’s pipeline corridor is within 10 miles of more than 20 active producers controlling over 1,000,000 proved gross acres of stacked pay from the Woodford, Springer, Sycamore and Meramec formations. Velocity has engineered a condensate stabilization facility with plans for construction this spring to insure producers are able to continually meet the RVP specifications of downstream pipelines and Cushing purchasers. Producers interested in more information about Velocity’s gathering and transportation services should contact Velocity CEO Rick Wilkerson at 918-574-2323.
“Velocity appreciates the continued support of Continental Resources and is honored to be working with CVR and Plains to deliver strong, reliable markets to our producer clients in the SCOOP and Merge. CVR is a highly successful downstream entity with vast expertise in refining and logistics,” said Rick Wilkerson, Velocity’s Chief Executive Officer. “Further, Plains is the premier crude oil transportation and terminal operator of barrels destined for Cushing, and we are proud to be partnered with them to provide a complete well-to-market transportation solution. The attractiveness of Woodford, Springer, Meramec and Sycamore crude to Midcontinent refiners like CVR, coupled with the reduction in crude gathering and transportation costs, provides the producers in the SCOOP and Merge with the Midcontinent’s preeminent market options.”
“As a part of CVR’s continued focus on expanding its logistics business, we are pleased with our partnership with Velocity and its ability to complete the fully envisioned crude oil pipeline project,” said Dave Lamp, Chief Executive Officer of CVR. “Velocity has a proven track record of developing, constructing, and operating high quality midstream assets and gathering systems.”
About Velocity Midstream Partners, LLC: Velocity is an independent midstream service provider that engineers, constructs and operates crude oil and natural gas gathering and transportation solutions. Velocity was formed in 2008 by Rick Wilkerson and Mike Parker. Chief Operating Officer Van Nguyen joined Velocity in 2010. Velocity owns and operates crude oil and condensate pipelines and terminals throughout the SCOOP and Merge basins. Since its inception, Velocity has been financially supported with capital commitments exceeding $300 million through its long-standing partnership with Energy Spectrum Partners.
About Plains All American Pipeline, LP: Plains All American Pipeline, L.P. is a publicly traded master limited partnership that owns and operates midstream energy infrastructure and provides logistics services for crude oil, natural gas liquids (“NGL”) and natural gas. PAA owns an extensive network of pipeline transportation, terminal, storage and gathering assets in key crude oil and NGL producing basins, in transportation corridors and at major market hubs in the United States and Canada. On average, PAA handles over 5 million barrels per day of crude oil and NGL in its Transportation segment. PAA is headquartered in Houston, Texas.
About Continental Resources, Inc.: Continental Resources (NYSE: CLR) is a top-15 independent oil producer in the Continental U.S. and a leader in America’s energy renaissance. Based in Oklahoma City, Continental is the largest leaseholder and the largest producer in the nation’s premier oil field, the Bakken play of North Dakota and Montana. The company also has significant positions in Oklahoma, including its SCOOP Woodford, SCOOP Springer and SCOOP Sycamore discoveries and the STACK plays. With a focus on the exploration and production of oil, Continental has unlocked the technology and resources vital to American energy independence and our nation’s leadership in the new world oil market. In 2017, the Company will celebrate 50 years of operations.