Crestwood Equity Partners LP Profile
Crestwood Equity Partners LP (Crestwood Equity) develops, acquires, owns or controls, and operates primarily fee-based assets and operations within the energy midstream sector.
The company provides broad-ranging infrastructure solutions across the value chain to service premier liquids-rich natural gas and crude oil shale plays across the United States. The company owns and operates a diversified portfolio of NGL, crude oil, natural gas and produced water gathering, processing, storage, disposal and transportation assets that connect fundamental energy supply with energy demand across North America.
All of the company’s consolidated operating assets are owned by or through its wholly-owned subsidiary, Crestwood Midstream, a Delaware limited partnership. In addition, the company has equity investments in joint ventures through which the company operates certain of their respective assets.
On February 1, 2022, the company acquired Oasis Midstream (Oasis Merger). The assets acquired in the Oasis Merger consist of the Rough Rider system and the Panther system.
On July 11, 2022, the company acquired Sendero, a privately-held midstream company. The Sendero assets, which consist of the Carlsbad system, are located in Eddy County, New Mexico and provide natural gas gathering, compression and processing services to customers in the Delaware Basin. Also, on July 11, 2022, the company acquired First Reserve’s 50% equity interest in Crestwood Permian. The company controls and owns 100% of the equity interests in Crestwood Permian. The assets acquired in the CPJV Acquisition consist of the Willow Lake, Orla and Desert Hills systems. The Sendero assets are complementary to Crestwood Permian’s assets and are being integrated with minimal capital investment, which the company expects will enable the company to capture substantial cost and commercial synergies.
On July 1, 2022, the company sold its assets in the Barnett Shale to EnLink Midstream, LLC (EnLink). The Barnett Shale assets consisted of the company’s gathering and processing systems located in Hood, Somervell, Johnson, Tarrant and southern Denton counties, Texas. On October 25, 2022, the company sold its Marcellus Shale assets to Antero Midstream Corporation (Antero). The Marcellus Shale assets consisted of gathering and compression systems in Harrison and Doddridge counties, West Virginia. These divestitures represent a full exit of the company’s gathering and processing operations in the Barnett and Marcellus Shales and allow the company to focus on building and optimizing its assets in the Williston, Delaware and Powder River basins, which best positions the company to deliver long-term value to its unitholders.
Assets
The company conducts its operations through Crestwood Midstream and its consolidated subsidiaries and the company’s joint ventures. The company’s financial statements reflect three operating and reporting segments: Gathering and Processing North Operations (includes the company’s Williston Basin and Powder River Basin operations); Gathering and Processing South Operations (includes the company’s Delaware Basin operations and an equity method investment); and Storage and Logistics Operations (includes the company’s crude oil, NGL and natural gas storage and logistics operations and two equity method investments).
Gathering and Processing North segment
The company’s gathering and processing north operations provide natural gas gathering, compression, treating and processing services, crude oil gathering and storage services and produced water gathering and disposal services to producers in the Williston Basin and Powder River Basin. The company’s Gathering and Processing North segment’s operating assets consist of natural gas facilities with approximately 818 MMcf/d of gathering capacity and approximately 775 MMcf/d of processing capacity; crude oil facilities with approximately 250 MBbls/d of gathering capacity and 496,000 Bbls of storage capacity; and produced water facilities with approximately 421 MBbls/d of gathering and disposal capacity.
Williston Basin
The company owns and operates the Arrow and Rough Rider systems, which consist of integrated crude oil, rich natural gas and produced water gathering systems, natural gas processing facilities (Bear Den and Wild Basin), crude oil storage facilities and produced water disposal facilities. The Arrow and Rough Rider systems are located in the core of the Bakken Shale primarily in McKenzie and Dunn counties, North Dakota, with the Arrow system primarily located on the Fort Berthold Indian Reservation.
The Rough Rider system connects to the Arrow crude oil system and is capable of transporting all of its crude oil volumes to the Arrow system. The Arrow system connects to the Dakota Access Pipeline (DAPL), Kinder Morgan Inc. (Kinder Morgan) Hiland, Tesoro High Plains Pipeline Company LLC (Tesoro) and True Companies’ Bridger Four Bears pipelines, providing significant downstream delivery capacity for the company’s Arrow and Rough Rider customers. Additionally, the company can transport Arrow and Rough Rider crude oil volumes to the company’s COLT Hub facility by pipeline or truck, which mitigates the impact of any potential pipeline shut-downs to the company’s producers with the ability to access multiple markets out of the basin. In addition to the multiple pipeline take-away outlets, the Arrow and Rough Rider systems have 496,000 Bbls of crude oil working storage capacity.
Powder River Basin
The company owns and operates the Jackalope rich natural gas gathering system, the Continental Express high pressure pipeline and the Bucking Horse gas processing facility in Converse County, Wyoming.
The company’s Gathering and Processing North segment provides services under a variety of contracts.
Gathering and Processing South segment
The company’s gathering and processing south operations provide natural gas gathering, compression and processing services, crude oil gathering services and produced water gathering and disposal services to producers in the Delaware Basin. The company’s Gathering and Processing South segment’s operating assets consist of natural gas facilities with 1.1 Bcf/d of gathering capacity and 613 MMcf/d of processing capacity; crude oil facilities with approximately 90 MBbls/d of gathering capacity; and produced water facilities with approximately 354 MBbls/d of gathering and disposal capacity.
Delaware Basin
The company owns and operates the Willow Lake, Orla, Carlsbad, Desert Hills and Panther systems, which consist of rich natural gas gathering systems, natural gas processing facilities (Orla and Carlsbad), a produced water gathering and disposal system (Desert Hills), and a produced water gathering and disposal system and a crude oil gathering system (Panther). The Willow Lake and Carlsbad systems’ gathering operations are located in Eddy County, New Mexico and are highly complementary to each other. The Orla natural gas processing facility is located in Reeves County, Texas. The company’s Desert Hills and Panther systems’ produced water and crude oil gathering operations are located in Culberson, Reeves, Winkler, Loving and Ward counties, Texas.
The company also owns an undivided interest in 80,000 Bbls/d of capacity in a segment of the Epic Y-Grade Pipeline, LP (EPIC) pipeline from Orla, Texas to Benedum, Texas.
Crestwood Permian Basin Equity Investment
The company’s Gathering and Processing South segment also includes its 50% equity interest in Crestwood Permian Basin LLC (Crestwood Permian Basin). A subsidiary of Shell plc owns the remaining 50% equity interest. Crestwood Permian Basin owns the Nautilus natural gas gathering system, which is operated by subsidiaries of Crestwood Midstream. Crestwood Permian Basin has a long-term fixed-fee gathering agreement with a subsidiary of ConocoPhillips Company (ConocoPhillips), under which Permian Delaware Enterprise has dedicated the gathering rights for its gas production across a large acreage position in Loving, Reeves and Ward counties, Texas to Crestwood Permian Basin.
The company’s Gathering and Processing South segment provides services under a variety of contracts.
Storage and Logistics segment
The company’s storage and logistics operations provide NGL, crude oil and natural gas storage, terminal, marketing and transportation (including rail, truck and pipeline) services to producers, refiners, marketers, utilities and other customers.
Below is a description of the company’s storage and logistics operating assets, including those of the company’s equity method investments.
NGL Storage Facilities: Consists of approximately 10 MMBbls of NGL storage capacity located in Pennsylvania, South Carolina, Mississippi, Michigan, New York and Indiana, with receipts and deliveries that are supported by both rail cars and third party pipelines, allowing truck and rail access to local markets.
NGL Terminals and Transportation: Includes a fleet of rail and rolling stock with approximately 1.6 MMBbls/d of NGL pipeline, terminal and transportation capacity, which also includes the company’s rail-to-truck terminals located in Michigan, Indiana, Ohio, New Hampshire, Pennsylvania, New Jersey, New York, Rhode Island, North Carolina, South Carolina and Mississippi. The company provides hauling services to customers primarily in the Central Mid-Continent and East Coast of the United States.
COLT Hub: The COLT Hub consists of the company’s integrated crude oil loading, storage and pipeline terminal located in the heart of the Williston Basin in Williams County, North Dakota. The COLT Hub has approximately 1.2 MMBbls of crude oil storage capacity and 160,000 Bbls/d of rail loading capacity. Customers can source crude oil for rail loading through interconnected gathering systems, a twelve-bay truck unloading rack and the COLT Connector, a 21-mile 10-inch bi-directional proprietary pipeline that connects the COLT terminal to the company’s storage tank facility at Dry Fork (Beaver Lodge/Ramberg junction). The COLT Hub is connected to the Meadowlark Midstream Company, LLC crude oil pipeline, Kinder Morgan Hiland crude oil pipelines and the DAPL interstate pipeline system at the COLT terminal, and the Enbridge Energy Partners, L.P. and Marathon interstate pipeline systems at Dry Fork. The pipelines and truck unloading racks connected to the COLT Hub can deliver up to approximately 290,000 Bbls/d of crude oil to the company’s terminal.
Natural Gas Storage Facility: The company owns a 50.01% equity interest in Tres Holdings, a joint venture between CMLP Tres Manager LLC, the company’s wholly-owned subsidiary, and Brookfield, which owns the remaining 49.99% equity interest in Tres Holdings. Tres Palacios Gas Storage LLC (Tres Palacios), a wholly-owned subsidiary of Tres Holdings, owns a FERC-certificated 34.9 Bcf multi-cycle salt dome natural gas storage facility located in Markham, Texas, with a FERC-certificated maximum injection rate of 1,000 MMcf/d and a maximum withdrawal rate of 2,500 MMcf/d. The Tres Palacios natural gas storage facility’s 63-mile, 24-inch diameter header system (including a 38-mile dual 24-inch diameter system, a 20-mile north pipeline lateral and an approximate 5-mile south pipeline lateral) interconnects with 12 pipeline systems and can receive residue gas from the tailgate of Kinder Morgan’s Houston central processing plant.
Powder River Basin Crude Oil Facilities: The company owns a 50.01% equity interest in Powder River Basin Industrial Complex, LLC (PRBIC), a joint venture between Crestwood Crude Logistics LLC, the company’s wholly-owned subsidiary and Twin Eagle Powder River Basin, LLC (Twin Eagle). PRBIC owns an integrated crude oil loading, storage and pipeline terminal located in Douglas County, Wyoming. PRBIC, which is operated by Twin Eagle, sources crude oil production from Powder River Basin producers through an eight-bay truck unloading rack. The PRBIC facility includes 20,000 Bbls/d of rail loading capacity and 380,000 Bbls of crude oil working storage capacity. The pipeline terminal includes connections to Kinder Morgan’s Double H Pipeline system and Plains All American Pipeline, L.P.’s (Plains) Rocky Mountain Pipeline system.
Cash flows from interruptible and other hub services provided by the company’s Tres Palacios joint venture tend to increase during the peak winter season. The cash flows from the company’s other storage and logistics operations represent sales to creditworthy customers typically under contracts with durations of one year or less, and tend to be seasonal in nature due to customer profiles and their tendencies to purchase NGLs during peak winter periods.
Regulation
The company is subject to pipeline safety regulations imposed by the U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration (PHMSA). PHMSA regulates safety requirements in the design, construction, operation and maintenance of jurisdictional natural gas and hazardous liquid pipeline and storage facilities. All of the company’s natural gas pipelines used in gathering, storage and transportation activities are subject to regulation by PHMSA under the Natural Gas Pipeline Safety Act of 1968, as amended (NGPSA), and all of the company’s NGL and crude oil pipelines used in gathering, storage and transportation activities are subject to regulation by PHMSA under the Hazardous Liquid Pipeline Safety Act of 1979, as amended (HLPSA).
The company’s equity investments’ natural gas pipelines used in gathering, storage and transportation activities are subject to regulation under the NGPSA.
The natural gas storage operations of Tres Palacios is subject to regulation by the FERC under the Natural Gas Act.
The company’s produced and flowback water underground injection operations are subject to the federal Safe Drinking Water Act (SDWA) and analogous state laws and regulations.
Certain of the company’s pipelines are considered common carrier pipelines subject to regulation by the FERC under the ICA.
Certain of the company’s crude oil operations located in North Dakota are subject to state regulation by the North Dakota Industrial Commission (NDIC).
The company’s assets in Texas include intrastate common carrier NGL pipelines subject to the regulation of the TRRC, which requires that the company’s NGL pipelines file tariff publications containing all the rules and the regulations governing the rates and charges for services the company performs.
The company’s NGL storage terminals are subject to federal, state and local regulation. For example, the Indiana Department of Natural Resources (INDNR), the New York State Department of Environmental Conservation (NYSDEC), Michigan Department of Environment, Great Lakes and Energy (EGLE) and the EPA have jurisdiction over the underground storage of NGLs and NGL related well drilling, well conversions and well plugging in Indiana, New York and Michigan, respectively. The INDNR regulates aspects of the company’s Seymour facility, the NYSDEC and EPA regulate aspects of the Bath facility and the EGLE and EPA regulate aspects of the company’s Alto facility.
Environmental and Occupational Safety and Health Matters
The following is a summary of the more significant existing federal environmental laws and regulations, each as amended from time to time, to which the company’s business operations and the operations of its equity investments are subject:
The Comprehensive Environmental Response, Compensation and Liability Act, a remedial statute that imposes strict liability on generators, transporters, disposers and arrangers of hazardous substances at sites where hazardous substance releases have occurred or are threatening to occur;
The Resource Conservation and Recovery Act, which governs the generation, treatment, storage and disposal of non-hazardous and hazardous wastes;
The Clean Air Act, which restricts the emission of air pollutants from many sources and imposes various pre-construction, monitoring and reporting requirements and that serves as a legal basis for the EPA to adopt climate change regulatory initiatives relating to greenhouse gas (GHG) emissions;
The Water Pollution Control Act, also known as the federal Clean Water Act, which regulates discharges of pollutants from facilities to state and federal waters and establishes the extent to which waterways are subject to federal jurisdiction and rulemaking as protected waters of the United States;
The Safe Drinking Water Act, which ensures the quality of the nation’s public drinking water through adoption of drinking water standards and controlling the injection of substances into below-ground formations that may adversely affect drinking water sources;
The National Environmental Policy Act, which requires federal agencies to evaluate major agency actions having the potential to significantly impact the environment and which may require the preparation of Environmental Assessments or detailed Environmental Impact Statements to be made available for public review and comment;
The Endangered Species Act, which restricts activities that may affect federally identified endangered or threatened species, or their habitats through the implementation of operating restrictions or a temporary, seasonal or permanent ban in affected areas; and
The Occupational Safety and Health Act, which establishes workplace standards for the protection of the health and safety of employees, including the implementation of hazard communications programs designed to inform employees about hazardous substances in the workplace, potential harmful effects of these substances and appropriate control measures.
History
The company, a Delaware limited partnership, was founded in 2001. It was incorporated in 2001. The company was formerly known as Inergy L.P. and changed its name to Crestwood Equity Partners LP in 2013.
