Three companies have joined forces to announce plans to construct a new 65-mile long 16-inch crude oil pipeline to serve Oklahoma’s STACK oil play.
Kingfisher Midstream, LLC and Blueknight Energy Partners, L.P. based in Oklahoma City and affiliates of Ergon, Inc. plan to construct the Cimarron Express Pipeline, carrying oil from northeastern Kingfisher county to the Cushing crude oil terminal.
Kingfisher Midstream LLC is a wholly-owned subsidiary of Alta Mesa Resources headquartered in Houston, Texas. Ergon, Inc. is headquartered in Jackson, Mississippi.
The oil will be piped to Blue Knight Energy’s terminal at Cushing, providing direct market access for producers. The line will have an initial capacity of 90,000 barrels a day and could be expanded to more than 175,000 barrels a day. The companies plan to have the construction completed and the line operational by the middle of 2019.
The ownership will be 50% Kingfisher Midstream and 50% Ergon. Ergon is the owner of the general partner BKEP and will hold its ownership in Cimarron Express through a newly-created and wholly owned subsidiary ERGON-OKLAHOMA PIPELINE LLC.
As part of the formation of the new pipeline company, Alta Mesa recently executed a long-term acreage dedication and transportation agreement with Cimarron Express which covers 120,000 net acres in Kingfisher and Garfield counties.
“We are excited to participate in this project which will provide direct market access to the Cushing Oil Terminal for STACK producers and afford them the opportunity to maximize the value of their crude oil production,” stated Craig Collins, COO of Kingfisher Midstream.
The new pipeline will be another boost for Blueknight Energy which already has 10.4 million barrels of liquid asphalt storage at 56 terminals in 26 states. It also 6.9 million barrels of above-ground crude oil storage capacity including 6.6 million at its Cushing Interchange terminalling facility. The company also has 655 miles of crude oil pipeline and most of it is in Oklahoma. In addition, Blueknight energy has 65 crude oil transportation vehicles in Oklahoma, Kansas and Texas.
Blueknight just announced its first quarter results showing net income of $4.4 million on total revenues of $44.7 million. It compares to net income of $3.5 million one year ago.