Kansas City’s Tallgrass Energy, LP says it will work with Kinder Morgan, Inc. in development of a solution to increase the existing crude oil takeaway capacity in Colorado and Wyoming. A new pipeline carrying crude to Cushing will be built as part of the agreement.
The two companies announced their plan will target the growing Powder River basin production as well as the production in the Denver-Julesburg basin. Under the agreement, the two could build new crude oil pipelines to move the crude south to Cushing and to the Gulf Coast.
Tallgrass said it would contribute its Pony Express Pipeline System while Kinder Morgan will contribute parts of its Wyoming Intrastate Company and Cheyenne Plains gas Pipeline. Together, they will start the process of abandonment and conversion to crude oil service.
It also means about 200 miles of new crude oil pipeline to be built to provide deliveries to the Cushing Hub in Oklahoma. The combined pipeline system created as a result of the agreement will be capable of delivering up to 800,000 barrels a day of light crude oil and 150,000 barrels a day of heavy crude oil from points in Wyoming and Colorado to TGE’s and Kinder Morgan’s Deeprock terminal in Cushing.