glass mountain slide - platts · pdf fileglass mountain pipeline, llc ownership ... well-known...

Glass Mountain Pipeline

David Minielly VP Operations- Rose Rock Midstream

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Presentation Topics

I. Background II. Granite Wash III. Mississippi Lime IV. System Overview V. System Construction VI. System Operation VII. Quality Specification & Rates VIII.Conclusion

Platt's Conference- September 20, 2012

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Structure of the Business

Glass Mountain Pipeline, LLC Ownership – Chesapeake Midstream Operating, LLC (Chesapeake) – Gavilon Energy Holdings II, LLC (Gavilon) – Glass Mountain Holding, LLC (SemGroup)

Partnership – Chesapeake – Committed shipper – Gavilon – Marketing and Cushing destination tanks – SemGroup – Construction and operation


http://www.chk.com/Pages/default.aspx

Glass Mountain?

Northwestern Oklahoma – Major county Selenite crystals


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Granite Wash

Large area spanning the Northern Texas Panhandle through Western Oklahoma and into Southwest Kansas

Oil and natural gas found in multiple zones at depths between 11,000 and 13,000 feet, with some natural gas as deep as 17,000 feet

The thickness and deposition may vary from 1,500 to 3,000 feet There are currently 3,600 Granite Wash wells and 922 Granite Wash

oil producers Current field prices yielding high rate of returns on production Well-known independent companies with stake in Granite Wash

– Chesapeake Energy – Apache Corp – Forest Oil Corp – St. Mary’s Land and Exploration – Penn Virginia


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Granite Wash and Chesapeake

Chesapeake is the largest leasehold owner, producer, and most active driller in the Granite Wash – Chesapeake owns significant leasehold acres in the following

plays of the Granite Wash: – Cleveland and Tonkawa Tight Sand (Western Oklahoma,

Texas Panhandle) – Hogshooter Formation (Western Oklahoma, Texas Panhandle)

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Granite Wash and Chesapeake

Cleveland and Tonkawa Tight Sands – Chesapeake owns approx. 525,000 net acres of leasehold in the

Cleveland play and 285,000 net acres in the Tonkawa play in western Oklahoma and Texas Panhandle

– Currently operating 13 rigs in the two plays

Hogshooter Wash – Chesapeake owns approx. 30,000 net acres in the Texas

Panhandle with 3 active wells in production – Currently drilling 2 wells with 11 scheduled to spud by end of 2012 – Chesapeake has identified approx. 60 potential drilling locations

in this play.


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Granite Wash Takeaway Capacity


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Mississippi Lime

More than 100 years ago, formation was referred to as the Burbank Field For 50 years, saw commercial production from thousands of vertical wells Due to limitations of traditional vertical drilling, these wells ran dry Advanced horizontal and hydraulic drilling styles that revolutionized

America’s shale formation are now being applied to limestone rock New technique allows drilling past the “chat” layer of rock and into the

tight lime below Due to its hard and porous nature, limestone is well suited for fracking The rock contains natural fissures and fractures that hold pockets of oil Horizontal drilling increases odds of hitting such a pocket Oil producing strata in the Mississippi Lime is just 4,000-6,000 feet deep


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Mississippi Lime and Chesapeake

Chesapeake’s approx. 2.0 million net acres of leasehold is the industry’s largest position in the Mississippi Lime play in northern Oklahoma and southern Kansas

Since 2009, the company has drilled 158 horizontal producing wells

Currently operating 18 rigs in the play


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Mississippi Lime Takeaway Capacity


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Pipeline System Overview

GMPL will be a ~210 mile intrastate joint venture pipeline system. – North Segment - 28 miles of 12-inch Alva to Cleo Springs, OK – Western Segment – 79 miles of 12-inch Arnett to Cleo Springs, OK – 103 miles of 18-inch Cleo Springs to Cushing, OK – Design Capacity

– Operated as a batch system with 1480 psig MOP


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Initial Maximum Northern Segment ~70 MBPD ~90 MBPD Western Segment ~77 MBPD ~85 MBPD Cleo Springs to Cushing ~147 MBPD ~175 MBPD

Pipeline System Overview (cont.)

Origination Tankage – 55Mbbl tank at Alva and Arnett – Two 150Mbbl breakout tanks at Cleo Springs – Two 10Mbbl injection tanks Western segment – One 10Mbbl injection tank Northern segment

Destination Tankage – Gavilon Terminal – 1.0 MMbbl (4X250Mbbl) – Direct connections to:

Enterprise Plains Rose Rock Midstream Magellan Coffeyville Resources


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Pipeline System Map Platt's Conference- September 20, 2012

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Pipeline System Construction

Glass Mountain Holdings LLC (SemGroup) Construction Manager

Schedule – Pipeline Formed May 2012 – Estimated construction schedule 18 months – To date:

■ Final route selection complete ■ 40% ROW purchased ■ Initial permitting and assessments complete ■ Pipe ordered ■ 75% design engineering complete ■ Major electrical and rotating equipment ordered ■ Construction January 2013 (3 to 4 spreads)


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ROW & Permitting

ROW – Enid field office, 8 agents – 4 survey crews – Origination station land purchased – Block valve locations identified

Permitting – Archaeological and environmental permitting assessment complete – Submitted Air Permit Applications to ODEQ for station tankage – Evaluating Corp of Engineers Nationwide 12 Permit


Engineering

Construction – EPC contract with Select Engineering (Tulsa) – 75% complete with design engineering – Tank construction out to bid – Pipe Ordered 1/3 delivered October – Pumps and Motors ordered – 3 to 4 spreads (18” into 2 spreads) – On schedule for 4th QTR 2013


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System Operation

Rose Rock Midstream – Pipeline Operator Gavilon – Cushing Tankage

– 4.1 MMbbl of existing shell capacity – Space to build another 3.0 MMbbl (civil work done) – 1.0 MMbbl of this existing capacity dedicated to GMPL.


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Quality Specifications & Rates

Separate Quality Specifications – Western segment – Granite Wash – Northern segment – Mississippi Lime

Agreements & Rates – Long Term T&D with Chesapeake – Negotiating additional T&Ds – Walk-up rate as space allows


Conclusion

Pipeline System is well-positioned to benefit from supply/demand fundamentals and expansion opportunities

GMPL will provide producers with new and significant take away capacity and flow assurance for two exciting plays

Cushing provides multiple market opportunities for shippers Cushing should continue to strengthen with increased

capacity to Gulf Coast Pipeline Construction is on schedule


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glass mountain slide - platts · pdf fileglass mountain pipeline, llc ownership ... well-known...

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