Tallgrass Pony Express Pipeline LLC is pursuing a potential expansion of its crude oil pipeline system to transport growing production in areas around its existing system receipt points. These areas include the Denver-Julesburg Basin in northeast Colorado and the Niobrara and Codell formations located in northeast Colorado and southeast Wyoming. Pony Express is also pursuing the expansion from Guernsey, Wyoming, to receive additional Bakken shale crude oil from its existing joint tariff partners and to accommodate growing Powder River Basin production.
Discussions with prospective shippers are in progress concerning the terms of binding precedent agreements that, if executed, would result in such shippers becoming committed shippers on the expansion project. If it is able to obtain such written commitments, Pony Express would conduct a binding open season shortly thereafter (likely in November) seeking shipper commitments to transport crude oil to multiple potential delivery locations in and around Cushing, Oklahoma.
If it is able to obtain sufficient commitments, Pony Express would finalize its design of the expansion project to recognize scalability benefits afforded by the existing system and the open season results. Construction and operation of the expansion would leverage off of the footprint and synergies of Pony Express's existing crude oil pipeline system, including its multiline rights of way.
The proposed expansion, which would be expected to be operational in the second half of 2016, involves the construction of new pipeline facilities to increase the current capacity of the Pony Express crude oil pipeline system by up to 400,000 barrels per day.
Beginning in mid-2015 and until the new facilities are placed into service, committed expansion shippers would have access to an estimated 100,000 barrels per day of interim increased capacity on the current Pony Express system in proportion to their volumetric commitment to the expansion. This short-term capacity increase is expected to be primarily achieved through the use of drag reducing agent on the existing system.