Platte River Midstream, a subsidiary of ARB Midstream, has secured a long-term, fee-based crude commitment from what it described as “one of the largest acreage holders and oil producers in the DJ [Denver-Julesburg] Basin.”

ARB declined to name the producer other than to detail that it has dedicated production from existing and all future wells drilled in a nine-township area in and around the Berthoud, Windsor and Greeley areas of Weld County, Colo. The crude will be gathered by pipeline into the company’s Lucerne West facility.

Adam Bedard, CEO at ARB Midstream, told Hart Energy that the crude commitment is the key transaction following ARB’s acquisition of the Platte River gathering system from Rimrock Midstream Holding last September.

“When we made the acquisition of the Platte River system we were betting that the market would rebound,” he said. “There was uncertainly. The only certainty was that the asset was not fully derisked. But for us it was only a matter of time for the markets to rebound. We rely very heavily on our ability to diagnose markets.”

At the time of the acquisition in September the PlatteRiver system began operations in 2016 and already had multiple long-term producer commitments, including some from the producer that now has made the major commitment.

The Platte River system has a capacity of 157,000 barrels per day (Mbbl/d). It gathers crude from the inner core of the DJ Basin and delivers to the Grand Mesa Pipeline, which in turn delivers to the hub at Cushing, Okla. The system comprises more than 40 miles of crude gathering lines, truck unloading at the Lucerne Hub and planned storage capacity of as much as 600 Mbbl.

“We will have more than 100 miles of pipeline in the ground by the end of this year,” said Pat McMurry, ARB’s senior vice president of gathering and logistics, in the statement announcing the crude supply agreement. “The Platte River gathering system serves two primary objectives: to provide safe, reliable takeaway capacity to support the producers’ rapid growth in the DJ Basin; and also to improve wellhead economics through stronger price realizations. Gathering crude by pipeline also meets the producers’ goals of significantly reducing truck traffic from their facilities.

“The Platte River system is currently moving abut 10% of the crude out of the DJ Basin and we hope to double that,” Bedard told Hart Energy. “We really saw the inflection point about a month ago in terms of rising volumes.”

Denver-based ARB Midstream is privately held. It markets crude through operations in Colorado, Texas, Wyoming, North Dakota and Alberta. ARB was formed with a strategic financing relationship with BV Natural Resources, the energy division of Ball Ventures. a private company based in Idaho Falls, Idaho. Ball Ventures is also active in real estate and other investments.

Looking ahead, Bedard is focused on the business at hand.

“As an early-stage midstream company we are concentrating on safety and cost-effective transportation. We are not so much looking ahead to whatever is next. When you focus on safety and cost, good things come from that. We know there are good things to come from this system, and other systems in the DJ and other basins. We have a great engineering and development team.”