In a move launching NGL Energy Partners LP’s entrance into Wyoming’s Powder River Basin, the company said June 29 that it would partner with Meritage Midstream Services II LLC to form a crude oil gathering and water services joint venture (JV).

“We are very excited to enter the Powder River Basin alongside Meritage Midstream,” said NGL CEO Mike Krimbill in a news release.

“This partnership will combine NGL’s expertise in wastewater disposal and treatment, solid waste disposal and crude oil logistics with the significant land position, pipeline infrastructure, and the outstanding customer base that Meritage already has in place,” he said.

The JV will operate on Meritage’s dedicated acreage in the Powder River Basin and offer services, including:

  • Crude oil and wastewater gathering pipelines.
  • Pipeline injection terminals.
  • Wastewater and solid waste disposal facilities.
  • Fresh water supply.

“This joint venture will provide a complete menu of crude oil and water services to our customers in the Powder River Basin and allow us to offer cost-effective, one-stop shopping for natural gas, NGLs, crude oil, waste water and frac water,” Steve Huckaby, CEO of Denver-based Meritage, said in a news release.

“By bundling services in and around our current footprint and making additional expansions to our ability to offer downstream value, Meritage is well-positioned as the region’s premier, full-service midstream provider,” he added. Meritage is backed by equity commitments from Riverstone Holdings LLC.

The companies announced further plans to examine pipeline connectivity options from the Powder River Basin to better serve local customers. They also expect to evaluate the potential of NGL’s assets in the region for downstream marketing at Cushing, Okla., and Gulf Coast markets. Currently, NGL operates five primary segments: water solutions, crude oil logistics, NGL logistics, refined products/renewables and retail propane.

“This partnership is the latest in a string of developments centered near the Rockies and in the water treatment/disposal business,” according to analyst Darren Horrowitz of Raymond James Financial Inc.

With capacity added by the announced JV, total water treatment capacity in the region surpassed more than 1 million barrels per day.

While there were no figures provided with the statement from the companies, the near-term benefits of the JV are likely to be slight, Horrowitz said in an “Energy Daily Update.”

“However, given the proximity to other NGL crude logistics assets, including the Grand Mesa pipeline and [Denver-Julesburg] Basin and Bakken shale systems, and the language used in the release, we believe this partnership may act as a foothold to support further growth in the region,” he concluded.

Contact the author, Caryn Livingston, at clivingston@hartenergy.com.

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