Tall Oak Midstream, LLC (“Tall Oak”) today announced that it has secured a long-term, fee-based natural gas gathering and processing agreement with one of the largest acreage holders and natural gas producers in the Mid-Continent’s STACK play (“the Company”). The Company has dedicated production from all existing and future wells drilled on 40,000 net acres located in Oklahoma’s Kingfisher and Blaine counties. The associated production will be gathered and processed at Tall Oak’s Chisholm Processing Complex, a cryogenic processing facility located in Kingfisher County.
Construction of the Chisholm plant is proceeding on schedule, and the first cryogenic processing train is expected to come into service in September 2015 with an initial capacity of 100 MMcf/d. To support the new dedication and increased demand from other customers, Tall Oak has ordered a second cryogenic train for the Chisholm complex that will add 200 MMcf/d in processing capacity, bringing the facility’s total processing capacity to 300 MMcf/d. Current plans call for the second train to come online in the third quarter of 2016. Future expansions at the Chisholm complex will allow for a total of 700 MMcf/d in processing capacity as customer demand increases. Tall Oak is currently operating more than 100 miles of gathering pipelines in the STACK with plans to complete an additional 100 miles of pipe and two more compressor stations in 2015.
“Notwithstanding the current commodity price environment, the STACK play is one of the most economic plays in the country and continues to provide strong returns for our customers,” said Tall Oak Chief Commercial Officer Carlos Evans. “This important agreement strengthens our position in the Mid-Continent, where we remain very focused on deploying the necessary capital and developing the infrastructure needed to stay ahead of our customers’ immediate and long-term needs.”
STACK Crude System Update
Tall Oak is also proceeding on the design and right of way acquisition for a crude oil gathering, storage and transportation system designed to serve producers in Oklahoma’s STACK play. Anchored by a long-term agreement with Felix Energy, LLC, the crude oil system will connect to multiple downstream pipelines that provide direct access to the market center at Cushing, Oklahoma. Tall Oak expects to bring the system into service by the fourth quarter of 2015. Tall Oak’s initial crude oil system will consist of a storage and truck-unloading facility east of Okarche, Oklahoma, in the center of the STACK play, and a 20-mile pipeline that will provide connections to multiple downstream markets. The Okarche facility will have the capacity to store 40,000 barrels of crude oil. Ultimately, Tall Oak expects to construct more than 200 miles of crude oil gathering pipelines and 150,000 barrels of storage.