PITTSBURGH -- Crestwood Midstream Partners, which has relied on mergers and acquisitions over the last decade to grow to $2.87 billion in market capitalization, is focused on organic projects in the infrastructure-starved Northeast.

“We’ve got a lot of long-term growth potential—$2 billion worth of projects nationwide across all our business segments,” Edmund Knolle, the company’s vice president of business development, told a record crowd at Hart Energy’s Marcellus-Utica Midstream Conference and Exposition. “About a quarter of that is in the Marcellus, and approximately half of that is Northeast storage and transmission.”

Crestwood already claims a leadership position in rail and truck transportation, boasting one of the largest fleets of both in the Marcellus. The company is one the top U.S. movers of NGL, particularly in the Northeast.

Knolle joined other conference speakers in urging a calm, realistic approach to the current downturn in oil and gas prices, but for the most part he said his job description does not include terms such as slow-down. “This is a cyclical business. Things change. Part of our job at Crestwood is to provide our customers with a way to manage that risk and provide them with attractive exposure to areas like the Marcellus,” he said.

In the central New York oil and gas region alone, Crestwood counts numerous growth opportunities, including:

  • Expansion of its MARC I pipeline, which connects its Stagecoach South Lateral to Transco’s Leidy Line to accommodate additional supply from Wilmot.
  • Feelers from producers, marketers and power generators about expansion of its North/South Pipeline lateral.
  • The 30-mile proposed 30-inch MARC II Pipeline, which would supply 1 billion cubic feet per day (Bcf/d) to the PennEast Pipeline.

From a geographical point of view, “it’s a relatively small footprint,” Knolle said. “We’ve got a lot going on in within approximately 60 to 70 miles between Millennium [Pipeline] and Transco [system]. We are FERC-regulated. We connect to most of the major gathering systems in the area, but we are different than a gathering system because we are FERC-regulated, [which means that] we’re a larger-diameter pipeline and held to a slightly different level of service.”

Crestwood is well-positioned in regional storage through what Knolle calls “happy coincidence.” The company owns 35 Bcf of Marcellus storage, incorporating four underground storage facilities.

“Originally these assets were developed for storage to serve [local distribution companies (LDCs)] in the market, because we all know, back in the early ’90s, there was practically no production in this area,” he said. “Producers had left a long time ago except for a few, like National Fuel [Gas Co.] and Talisman [Energy Inc.] that have been around.”

Those facilities are connected to the Millenium Pipeline, Kinder Morgan’s Tennessee Gas Pipeline, Dominion Transmission Inc.’s system and Williams Cos.’ Transco pipeline system, making them extremely well positioned to serve LDCs in the market, especially with Crestwood’s storage located geographically closest to New York City. In fact, New York’s Consolidated Edison Inc. (Con Ed) is one of the company’s largest storage customers.

“Historically, this asset was developed to serve LDCs in the region with a seasonal load,” Knolle said. “Today, we’re really a producer-driven asset. Producers are, by and large, the largest shippers on our system. They don’t use a lot of storage. The storage is primarily by the LDCs and then the marketers in between.”

The larger producers connected to Crestwood include Anadarko, Cabot, Chief, Chesapeake, Statoil, Mitsui and Southwestern.

So how sunny is Crestwood’s outlook in the Northeast? Pretty bright, especially considering the flexibility that its system offers to snare the best price, Knolle said.

“Today we’re taking about 1.2 Bcf/d onto our system and moving it across different pipes depending on what the basis differentials are. Sometimes we’re moving it north, sometimes we’re moving it south,” he said.

Already near the top, according to a Bentek ranking, Crestwood is continuing to grow because demand, despite an overall gloomy oil and gas price environment, is still heading north.

“In the last 40 days we hit a peak of 1.9 Bcf/d,” he said. “Expect to see that a whole lot more often. This year we’re going to be adding approximately 500 MMcf/d of receipt capacity.”

In the next few years, Crestwood expects to hit 2.3 Bcf/d.

“Producers still expect to see higher volumes, even in this price environment,” he said. “The gathering companies that we’re connected to have their hands full and there seem to be plenty of opportunities to bring more gas on our system.”