Enterprise Products to Purchase Piñon Midstream for $950M

Enterprise Products Partners (Enterprise) signed a definitive agreement to acquire Piñon Midstream in a debt-free transaction of $950 million. Piñon Midstream conducts natural gas gathering and treating work in the Delaware Basin’s eastern region, comprising New Mexico and Texas. The transaction is expected to close in Q4 2024.

“We are excited to announce the acquisition of Piñon Midstream,” said A.J. Teague, Co-CEO of Enterprise’s general partner. “We believe the Piñon management team has developed the premier sour natural gas treating system in the Delaware Basin. These assets accelerate our entry into this region by at least three or four years. These assets are complementary to our midstream energy system and provide us an entry point into the eastern flank of the Delaware Basin for us to expand our natural gas processing footprint. Our entry will provide producers a choice for reliable and value-added processing services.”

According to Enterprise’s estimations, Lea County, NM, and Winkler County, TX, have more than 7,500 remaining well locations with access to six geologic production benches. Drilling activity in this Delaware Basin region has been restricted due to:

• Lack of sour natural gas treating
• Lack of acid gas injection well capacity
• Lengthy permitting process (up to two years) for acid gas injection wells

“The Piñon team is thrilled to contribute our Delaware Basin gas-treating system to Enterprise,” said Steven Green, CEO of Piñon Midstream. “Our team, and specifically our field personnel and employees, set out to build a sour gas treatment and carbon sequestration asset in the market and, with the support of our producer clients, achieved our goal. We would also like to thank the Black Bay Energy Capital team for their partnership and support to start this business during a challenging time in the energy markets.”

Acid gas injection at Dark Horse Treating Facility; Image Credits: Pinon Midstream

Piñon’s assets include approximately 50 miles of natural gas gathering and redelivery pipelines, five 3-stage compressor stations, and 270 MMcf/d of hydrogen sulfide and CO₂ treating facilities with a planned expansion capacity of 450 MMcf/d to be completed after mid-2025. It also owns two high-capacity, deep acid gas injection wells and, under the transaction, Enterprise will evaluate a third well location to support up to 750 MMcf/d in total treating capacity.

Piñon’s Dark Horse Facility

In June 2024, Piñon Midstream secured monitoring, reporting, and verification plan approval from the U.S. Environmental Protection Agency for the permanent storage of CO₂ in two acid gas injection wells at the Dark Horse Treating Facility in Lea County, NM. The wells offer sequestration redundancy for operators in the Delaware Basin using Piñon’s Dark Horse facility to mitigate flaring and access local drilling inventory.

The AGI wells—Independence AGI 1 and Independence AGI 2—are Devonian wells reaching depths approximately 3.4 miles below the surface into rock formations. These formations are located several thousand feet below water aquifers and existing Delaware Basin oil and natural gas-producing formations. The wells are approved for a combined 20 million cubic feet per day of CO₂ and H₂S injection, equivalent to approximately 250,000 metric tons (MT) of CO₂ and 110,000 MT of H₂S per year.