Tallgrass Energy LP (NYSE: TGE) said Oct. 15 it had expanded its joint venture (JV) with private-equity-backed Silver Creek Midstream LLC in the growing Powder River Basin.

Tallgrass and Silver Creek formed the JV in February 2018 to develop the Iron Horse pipeline to transport crude oil from the Powder River Basin to Guernsey, Wyo. As part of the expanded JV, named Powder River Gateway LLC, the partnership will now own the Iron Horse and the Powder River Express (PRE) pipelines as well as crude oil terminal facilities in Guernsey.

Tallgrass will operate the JV and own 51% of Powder River Gateway. Meanwhile, Silver Creek will own 49%. Analysts with Capital One Securities Inc. estimate Tallgrass’ stake in the Powder River Gateway JV will generate roughly $25 million of EBITDA annually.

Further, the Capital One analysts said the expanded Tallgrass and Silver Creek JV aims to provide seamless crude transportation from the Powder River Basin to export markets on the Gulf Coast south of New Orleans.

“The expanded JV should bolster throughput volumes on the Tallgrass PRE pipeline, as well as the Seahorse pipeline and Plaquemines Liquids Terminal (PLT) projects that are under development,” Capital One analysts said in a research note on Oct. 16.

Iron Horse is a roughly 80-mile, 16-inch crude oil pipeline currently under construction and expected to be in-service in first-quarter 2019. The pipeline will have an initial capacity of about 100,000 barrels per day (bbl/d) and is expandable up to 200,000 bbl/d.

PRE is a roughly 70-mile, 12-inch crude oil pipeline, with a current capacity of 90,000 bbl/d expandable up to 125,000 bbl/d.

Both Iron Horse and PRE will transport crude oil produced in the Powder River Basin from Silver Creek’s Pronghorn Terminal to Guernsey where the crude oil has access to Tallgrass’ Pony Express crude pipeline system and two other existing takeaway pipelines.

The crude oil terminal facilities in Guernsey collectively own over 340 acres, including 370,000 barrels of crude storage currently in-service. Once fully constructed, the terminal facilities will include more than 1 million barrels of storage.

Powder River Gateway has existing interconnections to Pony Express, two other takeaway pipeline connections, and has the ability to access any other current or future markets at Guernsey.

In addition, Powder River Gateway intends to create joint tariffs with both Pony Express and Tallgrass’ Seahorse Pipeline.

Tallgrass expects this will provide Iron Horse and PRE shippers seamless transportation from Silver Creek’s Pronghorn Terminal to Cushing, Okla., St. James, La., export markets through PLT, and more than 3 million bbl/d of refining demand directly connected to Pony Express or Seahorse.

Based in Leawood, Kan., Tallgrass operates midstream energy infrastructure across 11 states with transportation, storage, terminal, water, gathering and processing assets serving several crude oil and natural gas basins in the U.S.

In the Powder River Basin, Tallgrass, which owns and operates Pony Express and is developing both the Seahorse Pipeline and PLT projects, also provides extensive downstream market access for the basin’s producers. Additionally, Tallgrass is pursuing multiple expansion projects on Pony Express to meet the needs of growing Powder River Basin production, according to the company release.

Tallgrass’ expansion projects in the basin will be staged over the next few years, with the initial pump upgrades coming online in 2018. Pony Express intends to launch an open season for additional expansion capacity out of Powder River Gateway’s Guernsey facility in November.

“We look forward to expanding our partnership with Silver Creek as they continue to extend their footprint in the PRB,” said Tallgrass COO Bill Moler in a statement. “Our combined Powder River pipeline system will offer superior transportation service and increased expansion flexibility, allowing Powder River Gateway to continue offering the most competitive rates and services in the Powder River Basin as production continues to increase.”

Headquartered in Irving, Texas, Silver Creek is a private midstream company focused on providing crude oil gathering, transportation and storage services in Wyoming with existing assets serving the Powder River, Big Horn and Wind River basins. The company is backed by an equity commitment from Tailwater Capital LLC, The Energy & Minerals Group and Silver Creek management.

When combining Silver Creek’s existing system with its recent acquisition of additional Powder River Basin crude oil assets, the company will own and operate a total of 120 miles of existing pipeline and have more than 330,000 acres dedicated from top Powder River Basin producers.

Silver Creek’s Powder River Basin infrastructure offers rail capability in and out of the company’s Pronghorn Terminal located in Converse County, Wyo., batching capabilities throughout the system for at least three specs of crude and trucking capabilities through a transportation fleet to meet interim service needs as gathering pipelines are constructed.

Furthermore, Silver Creek will commence construction in fourth-quarter 2018 to further develop the existing gathering and trunkline infrastructure by an initial 52 miles of crude pipelines and more than 100,000 barrels of additional storage.

“Silver Creek is pleased to expand our relationship with Tallgrass in the PRB,” J. Patrick Barley, founder and CEO of Silver Creek, said in a statement. “Their current and growing long-haul crude transportation capabilities combined with Silver Creek’s gathering and transportation assets in the Powder River Basin position Powder River Gateway to be the most efficient and flexible transportation and terminal facility in the PRB, offering access to all Guernsey downstream markets.”

Onshore