SemGroup, Gavilon, Chesapeake to build Cushing oil pipeline

TULSA, Okla. - SemGroup Corp., Gavilon Midstream Energy LLC and an affiliate of Chesapeake Energy Corp. will form a joint venture to build a pipeline to deliver crude oil to a storage facility in Cushing, Okla., from production in western and north central areas of the state.

The pipeline will consist of two laterals, one originating near the town of Alva in Woods County, Okla., and the other near the town of Arnett in Ellis County, Okla. The laterals will intersect near Cleo Springs in Major County, Okla., where the pipeline will increase in diameter and continue east to storage at Cushing.

The pipeline and storage facility will meet growing midstream requirements resulting from the burgeoning drilling activity in western Oklahoma and the Mississippi Lime play.

Construction should begin in July and service is expected to start in the third quarter of 2013, according to a Feb. 21 statement. The 210-mile pipeline will have an initial capacity of 140,000 barrels a day (b/d) and can be expanded to 180,000 barrels.

Lateral lines from Alva and Arnett, Okla., will intersect and bring crude oil to a one-million-barrel-capacity tank farm in Cushing.

Cushing is the largest U.S. oil-storage hub and delivery point for crude futures traded on the New York Mercantile Exchange. The hub’s total capacity was 66.5 million barrels at the end of September, according to the U.S. Energy Department.