Crestwood Equity Partners LP (NYSE: CEQP) said Oct. 28 it will form a $500 million joint venture (JV) with First Reserve in connection with the company's Delaware Basin expansion opportunities.

The Houston company said it's in exclusive negotiations with the private equity firm to form a development JV (50/50) dedicated to support growing producer demand for midstream infrastructure in the basin.

First Reserve JV

Under the JV terms, First Reserve and Crestwood will initially commit equity capital of $500 million. The capital will be available to the JV for financing identified greenfield development and acquisition opportunities in an area of mutual interest spanning Reeves, Culberson and Loving counties, Texas.

First Reserve will fund 100% of the initial capital requirements to the JV during the early-stage build-out of the systems. Crestwood will then fund 100% of capital requirements for a period of time to achieve the 50/50 capital structure.

“The Delaware Permian Basin is the most active shale play in the U.S., and Crestwood is well-positioned with current assets and future projects to build significant midstream infrastructure in the area and provide much needed midstream solutions for our producer customers,” said Heath Deneke, Crestwood’s COO and president of the pipeline services division, in a statement.

Delta Crude System

Crestwood also said Oct. 28 it has launched an open season for shipper support of the Delaware Takeaway (Delta) crude pipeline system.

The Delta system is an estimated 164-mile crude and condensate pipeline header system originating at a new Crestwood terminal to be built in Orla, Texas, in Reeves County. This project has the potential to provide shippers access to attractive end markets including: El Paso, Texas; Midland, Texas; Cushing, Okla.; Houston; and Corpus Christi, Texas.

As designed, Delta will have the capability to batch multiple grades of crude and condensate, and initially transport more than 200,000 barrels per day. The project may be further expanded based on the results of the open season.

Delta is expected to be operational in the second quarter of 2017, the release said.

Delaware Three-Stream System

Crestwood is in exclusive negotiations with a large producer in the Delaware Permian Basin to anchor a large scale three-stream gathering system spanning portions of Reeves, Loving, and Culberson counties, Texas.

The gathering system will aggregate crude and condensate volumes to Crestwood’s Orla Terminal. As currently designed, the system would consist of about 600 miles of pipelines and will span an area in excess of 400,000 acres.

The Orla Terminal is planned to initially provide about 200,000 barrels (bbl) of storage, truck loading and unloading facilities, blending services, multiple upstream and downstream pipeline connections. It will potentially provide condensate stabilization services for Wolfcamp production, the release said.