An Enterprise Products Partners LP affiliate has agreed to acquire Piñon Midstream LLC for $950 million, expanding its natural gas processing footprint into the eastern flank of the Delaware basin in New Mexico and Texas.
Piñon Midstream, a portfolio company of Black Bay Energy Capital, holds about 50 miles of natural gas gathering and redelivery pipelines, five 3-stage compressor stations, 270 MMcfd of existing H2S and CO2 treatment plants with an expansion to 450 MMcfd of capacity expected to be completed in second-half 2025, and two of the highest capacity and deepest acid gas injection wells (about 18,000 ft) below the surface in the basin, Enterprise said in a release Aug. 21 (OGJ Online, June 23, 2023).
As part of this transaction, Enterprise is evaluating locations for a third injection well that would support up to 750 MMcfd of total treating capacity.
“We believe the Piñon management team has developed the premier sour natural gas treating system in the Delaware basin,” said A. J. “Jim” Teague, co-chief executive officer of Enterprise’s general partner, in a release Aug. 21, noting the acquisition accelerates the company’s entry into the region “by at least 3-4 years.”
The business is supported by fee-based contracts with long-term acreage dedications, including minimum volume commitments, Enterprise said. Additionally, Piñon Midstream’s monitoring, reporting, and verification plan for CO2 sequestration in its two acid injection Devonian wells at the Dark Horse treatment plant in Lea County, NM, was approved by the Environmental Protection Agency in June of 2024 (OGJ Online, June 18, 2024).
Enterprise estimates this area of the Delaware basin, largely comprised of Lea County, NM, and Winkler County, Tex., has more than 7,500 remaining well locations and has access to at least six geologic production benches. Drilling activity in this area has generally been restricted due to the lack of sour natural gas treating and acid gas injection well capacity as well as the lengthy permitting process for acid gas injection wells which can take up to two years.
The deal is expected to close in this year’s fourth quarter subject to customary regulatory approvals.
