Overview of the Project
On August 2, 2018, EnLink Crude Pipeline, LLC (“Carrier”) issued a press release announcing an open season to obtain shipper commitments on an expansion of capacity (“Expansion” or “Expansion Capacity”) of its pipeline system (“Pipeline” or “Existing Capacity”) in the Midland Basin in Texas (“Open Season”). The Pipeline currently gathers and transports crude oil from origin points located in Upton County, Texas and Midland County, Texas (“Origin Points”) to the Permian Express Midland Terminal and the Enterprise Midland Terminal in Midland County, Texas and the P66 Gray Oak Pipeline in Upton County, Texas (“Destination Points”).1 The Open Season began at August 2, 2018, at 8 a.m. CST, and will end at September 4, 2018, at 5 p.m. CST.
Provided below is a summary of the key terms and conditions of service being offered in this Open Season. A more detailed explanation of the key terms and conditions of service is provided in the Open Season Procedures, which shall be available to any interested shipper upon the execution of a Confidentiality Agreement. The initial form of the Throughput & Deficiency Agreement (“Expansion T&D”) shall also be available to those interested shippers upon the execution of a Confidentiality Agreement.
- The Expansion, which is expected to commence service by the third quarter of 2018, will provide gathering and transportation service from the Origin Points to the Destination Points.
- Carrier will retain at least 10 percent of Expansion Capacity for Uncommitted Shippers,2 both in the context of this Open Season and during the term of the Expansion T&Ds.
- Committed Shippers must execute an Expansion T&D and must commit therein to ship, or otherwise pay for failing to ship, a minimum volume of crude petroleum on the Pipeline over a specified period of time (“Expansion Committed Volume” and “Expansion Committed Shipper”, respectively). An Expansion Committed Shipper’s Expansion Committed Volume must be equal to or greater than 15,000 barrels per day. Expansion Committed Shippers may nominate incremental barrels in addition to their Expansion Committed Volume, and such incremental barrels may be entitled to receive firm service, subject to availability of Expansion Capacity.
- The rates applicable to Expansion Committed Shippers will be set at a premium as compared to the rates applicable to Uncommitted Shippers on the Pipeline (“Expansion Committed Rates”), and will consist of a separate rate for movements made on the gathering system portion of the Pipeline and movements made on the mainline portion of the Pipeline.
- The Expansion Committed Rates will be lower than the rates applicable to committed shippers on the Existing Capacity (“Existing Committed Shippers”). Therefore, Carrier will provide each Existing Committed Shipper an option to amend its original Throughput & Deficiency Agreement (“Existing Capacity T&D”) to state that the Expansion Committed Rates will now apply to movements of committed volumes under the Existing Capacity T&D, rather than the higher committed rates that currently apply to such movements.
- All movements on the Expansion Capacity will be subject to the rules and regulations tariff that governs movements on the Existing Capacity.
- The initial term of an Expansion Committed Shipper’s Expansion T&D will extend ten (10) years from the In-Service Date of the Expansion (“Initial Term”). After expiration of the Initial Term, the Expansion T&D will automatically renew for successive one (1)-year terms, unless terminated pursuant to the terms of the Expansion T&D.
- The Expansion T&D provides that Carrier shall have the right to add new origin points or destination points to the Pipeline during the term of the Expansion T&D, and that each Expansion Committed Shipper shall have the right to ship products to or from the new points and agrees to support any filings necessary to effectuate the addition of such new origin points or destination points. Such revisions may include adding, at Carrier’s sole discretion, additional Destination Point(s) and/or Origin Point(s) on the Pipeline, services to or from which may be subject to a surcharge or additional charge.
- An Expansion Committed Shipper that executes an Expansion T&D will have the right to designate third party shippers to ship crude oil on behalf of the Expansion Committed Shipper, subject to the conditions set forth in the Expansion T&D.
Any party interested in obtaining a copy of the Open Season Procedures and/or the Expansion T&D should contact Rick Van Eyk at Rick.VanEyk@enlink.com or 713-739-3244. Click here to download the Open Season Notice; click here to download the Confidentiality Agreement.
(1) The interconnection providing service to the P66 Gray Oak Pipeline destination point in Upton County, Texas is anticipated to be operational in the fourth quarter of 2019.
(2) Shippers that execute a T&D with Carrier are referred to as “Committed Shippers.” Shippers that elect not to execute a T&D with Carrier are referred to as “Uncommitted Shippers."