SemGroup, Chesapeake to build Oklahoma crude oil pipeline

SemGroup Corp., Gavilon Group LLC unit Gavilon Midstream Energy LLC, and a unit of Chesapeake Energy Corp. plan to form a joint venture to build a 210-mile pipeline in western and north-central Oklahoma. The line will transport oil to a 1 million bbl storage facility in Cushing. The companies described the project as meeting growing midstream requirements resulting from drilling activity in western Oklahoma and the Mississippi Lime play.

The pipeline will consist of two laterals, one starting near Alva in Woods County, Okla., and the other near Arnett in Ellis County, Okla. The laterals will intersect near Cleo Springs in Major County, Okla., where the pipeline will increase in diameter and continue east to storage at Cushing.

The pipeline will have an initial capacity of 140,000 b/d, expandable to 180,000 b/d through additional horsepower. SemGroup will design, build, and operate the pipeline; Chesapeake is the project’s anchor shipper; and Gavilon will perform risk management and clear the shipped crude in the Cushing market.

The companies plan to begin building the pipeline in July for an in-service date of third-quarter 2013.

SemGroup unit SemCrude LP last year contracted to build 1.95 million bbl of additional crude oil storage at its Cushing terminal to service expanded flows from the Denver-Julesburg basin on its White Cliffs Pipeline (OGJ Online, Apr. 4, 2011).

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