Atlas Pipeline Partners, L.P. (APL) ("APL," "Atlas Pipeline," or the "Partnership") today announced Atlas Pipeline and Pioneer Natural Resources (NYSE: PXD; "Pioneer") have entered into an agreement to substantially expand Pioneer's commitment to APL in the burgeoning Permian Basin of West Texas. The amendment extends the contractual term for an additional 10 years (through 2032) and extends the area of mutual interest in Martin and Andrews Counties in the rapidly-developing northern part of the Basin. Responsive to the accelerating pace of activity in this portion of the play, APL will immediately undertake the construction of a new incremental 200 MMCFD cryogenic processing facility in the northern part of the Permian, scheduled to enter service in the second half of 2015. The Pioneer extension is under similar contract terms as the existing contract.
This plant will be fully integrated with APL's WestTX gathering and processing system, which currently has 455 MMCFD of processing capacity and over 3,600 miles of gathering infrastructure. The new processing capacity comes on the heels of the Edward facility, another 200 MMCFD cryogenic plant that was announced in July 2013, which is expected to be in service early in the fourth quarter of 2014. Upon completion of these additions, APL will have 855 MMCFD of processing capacity in the Permian Basin. Construction and installation costs for the plant are expected to be $100-120 million net to the Partnership. The majority of the capital will be invested in 2015.
"The announcement of this new, incremental plant, even before the Edward facility has been installed, indicates activity continues to exceed expectations for the play. By the second half of 2015, we will have installed three state-of-the-art 200 MMCFD cryogenic plants in the Permian Basin in less than 30 months. We will continue to work to provide even better service to our over 100 producing customers in the Permian Basin," remarked Eugene Dubay, Chief Executive Officer of the Partnership.
Patrick McDonie, President and Chief Operating Officer, added: "We have very much enjoyed our long term working relationship with Pioneer, the leading E&P developer of the Permian. We look forward to continuing the relationship with them and all of our customers in the region."