Matador weighs options for expanding Delaware basin gas processing capacity

July 28, 2023
Matador Resources is considering options to expand its cryogenic natural gas processing capacity in northern Lea County, NM, as part of the operator’s strategy to accommodate anticipated growth in regional gas production.

Matador Resources Co., Dallas, is considering options to expand its cryogenic natural gas processing capacity in northern Lea County, NM, as part of the operator’s strategy to accommodate anticipated growth in regional gas production (OGJ Online, July 25, 2023).

To increase flow assurance for rising gas volumes from Matador’s acreage in Lea County—including assets gained via its recent $1.6-billion acquisition of Advance Energy Partners Holdings LLC—and regional third-party producers, Matador plans to further expand its local gas processing capacity by another 200 MMcfd, the company said.

The proposed capacity expansion could either involve Matador’s independent construction of a new gas plant or, alternatively, entail a new gas plant built as part of a potential partnership, the company revealed during its July 26 quarterly earnings call.

While Matador confirmed it is currently evaluating whether to include a partner for the proposed plant, the project—which remains in its early stages—could also involve an expansion of San Mateo Midstream LLC’s 460-MMcfd Black River processing plant in Lea County, according to Joe Foran, Matador’s chairman and chief executive officer.

While Matador believes another gas plant is needed in the area to meet overall production from that portion of Delaware basin, in lieu of a separate gas plant, Matador could simply add the new capacity to the Black River plant, Foran said during the call.

The Black River plant—which Matador (51%) owns alongside joint-venture partner Five Point Energy LLC (49%)—previously completed a 200-MMcfd expansion to its current capacity in 2020 (OGJ Online, Sept. 1, 2020).

Following completion of its Advance acquisition in April 2023, Matador, through subsidiary Pronto Midstream LLC, also owns the Marlan gathering and processing system in Lea and Eddy Counties, NM, which includes the 60-MMcfd Marlan gas plant (OGJ Online, Feb. 6, 2023).

Glenn Stetson, Matador’s executive vice-president of production, said the company also believes the Marlan plant—which received increased throughputs during second-quarter 2023 via its direct connection to 15 of Matador’s operated wells—will be full by yearend, further supporting the proposed capacity expansion plans for the region.

While planning is under way, Matador stressed that its primary objective is to protect its balance sheet.

“We want to reduce debt. And while we'd like a [new] plant…we're not trying to get a monopoly on new plants out there in that area,” said Foran, adding that a partner for the project could make the proposition more appealing.

The operator did not reveal a specific timeframe for when it will reach a definitive decision on the Lea County capacity expansion.