Enterprise Products Partners to acquire Piñon Midstream

An affiliate of Houston-based Enterprise Products Partners agreed to acquire Piñon Midstream, a portfolio company of Black Bay Energy Capital, in a debt-free transaction for $950 million in cash consideration.

Piñon Midstream provides natural gas gathering and treating services in the core of the prolific eastern flank of the Delaware Basin in New Mexico and Texas. Piñon Midstream’s assets include about 50 miles of natural gas gathering and redelivery pipelines, five 3-stage compressor stations, 270 million cu. ft. per day (MMcf/d) of existing hydrogen sulfide and carbon dioxide treating facilities with an expansion to 450 MMcf/d of capacity expected to be completed in the second half of 2025, and two of the highest capacity and deepest acid gas injection wells in the basin. As part of this transaction, Enterprise is evaluating locations for a third injection well that would support up to 750 MMcf/d of total treating capacity.

This business is supported by fee-based contracts with long-term acreage dedications, including minimum volume commitments. Additionally, Piñon Midstream’s monitoring, reporting and verification (MRV) plan for permanent sequestration of carbon dioxide in its two AGI wells located at its Dark Horse Treating Facility in Lea County, New Mexico, was approved by the Environmental Protection Agency in June 2024, according to Enterprise. This MRV approval satisfies a major requirement for 45Q tax credit eligibility.

Enterprise estimates this area of the Delaware Basin, largely composed of Lea County, New Mexico, and Winkler County, Texas, has more than 7,500 remaining well locations and has access to at least six geologic production benches. Drilling activity in this area has generally been restricted due to the lack of sour natural gas treating and acid gas injection well capacity as well as the lengthy permitting process for acid gas injection wells that can take up to two years.

“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,” says A. J. “Jim” Teague, co-CEO of Enterprise’s general partner. “These assets are highly complementary to our midstream energy system and provide us an excellent entry point into the eastern flank of the Delaware Basin for us to expand our natural gas processing footprint.”

The transaction is expected to be completed in the fourth quarter of 2024.

Enterprise is one of the largest publicly traded partnerships and a North American provider of midstream energy services to producers and consumers of natural gas, NGLs, crude oil, refined products and petrochemicals.

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