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Rose Rock to Expand the White Cliffs Pipeline with Partners

Zacks Equity Research

White Cliffs Pipeline, LLC – a joint venture between Rose Rock Midstream, L.P. (RRMS), Noble Energy, Inc. (NBL), Plains All American Pipeline, L.P. (PAA) and Western Gas Partners LP (WES) – plans to enhance its pipeline capacity. Upon completion, the capacity of the pipeline will increase to a maximum of around 215,000 barrels per day (:BPD) from 150,000 BPD.

The pipeline expansion deals with improving horsepower, transforming pumps and adding stations. Its objective is to ease the transportation of growing crude oil shipments from the Denver Julesburg (:DJ) Basin to the Cushing hub. The project will likely complete in the third quarter of 2015.

The 527-mile long White Cliffs Pipeline has two 12-inch common-carrier, crude oil pipelines. The pipeline originates in Platteville, CO and ends at Rose Rock Midstream’s storage facility in Cushing, OK.

Previously, the White Cliffs Pipeline capacity was increased to around 150,000 BPD from 76,000 BPD.

The DJ Basin is located over a wide area, from the east side of the Rocky Mountains to Western Kansas, and from the north of Southern Colorado to Southeastern Wyoming and Southwestern Nebraska. As per a recent U.S. Geological Survey assessment, the DJ Basin has reserves of over 1.05 billion barrels of oil and 3.67 trillion cubic feet of natural gas.

Exploration and production companies are drilling actively in the DJ Basin to tap these reserves. Noble Energy recorded year-over-year production growth of 15% in this basin in the third quarter of 2014. The company intends to keep increasing its drilling activities to unlock more prospects.

Another upstream player active in the DJ Basin is Anadarko Petroleum Corporation (APC).

White Cliffs Pipeline currently has throughput contracts with Anadarko Petroleum and Noble Energy. With active upstream players in the DJ Basin, the demand for midstream services will concomitantly rise in the region.

The expansion project will help to meet the increasing demand of midstream services from the exploration and production companies, as the White Cliffs Pipeline is the only pipeline which directly transports crude oil out of the DJ Basin to the Cushing market and eventually to the Mid-Continent refiners. Scheduled completion of the project will likely ensure a stable cash inflow stream.

Rose Rock Midstream currently has a Zacks Rank #3 (Hold).

Read the Full Research Report on PAA
Read the Full Research Report on NBL
Read the Full Research Report on APC
Read the Full Research Report on WES
Read the Full Research Report on RRMS

Zacks Investment Research