Tallgrass Pony Express Pipeline LLC announced that it is pursuing a possible expansion of its crude oil pipeline system to transport production in areas around its existing system receipt points. Areas included in the possible expansion are the Denver-Julesburg Basin in northeast Colorado and the Niobrara and Codell formations in northeast Colorado and southeast Wyoming. Pony Express is also considering an expansion from Guernsey, Wyo., to allow for receipt of additional Bakken Shale crude oil from its existing joint tariff partners and to provide for growing production from the Powder River Basin.
Pony Express is also discussing possible binding precedent agreements for the expansion project with prospective shippers. If it is able to obtain such commitments, Pony Express would hold a binding open season, likely in November, to seek shipper commitments for crude oil transport to several potential delivery locations in and around Cushing, Okla. If it obtains sufficient commitments, Pony Express will finalize its project design.
The proposed expansion includes the construction of new pipeline facilities to increase the current capacity of the pipeline system by up to 400,000 barrels per day (bbl/d). Beginning in mid-2015 and until the new facilities are placed into service, committed expansion shippers would have access to about 100,000 bbl/d of interim capacity on the current Pony Express system, in proportion to their volumetric commitment to the expansion. The short-term increase is expected to be achieved through the use of drag-reducing agent on the system. The proposed expansion, if it proceeds, would be expected to be operational in second-half 2016.
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