Crestwood Equity Partners, a Houston-based midstream business owner and operator in shale resource plays, recently revised its 2023 well guidance for the Delaware Basin. The adjustment was made due to producers deferring their activity into the following year.
Strong Growth in Second Quarter
During the second quarter of 2023, Crestwood experienced robust producer activity, resulting in the connection of 73 new wells to their gathering systems. This brings the year-to-date total to 143 well connects, surpassing initial expectations set at the beginning of the year. As a result, there has been significant volumetric growth across nearly all of Crestwood’s gathering and processing assets.
Record-Breaking Delaware Basin Volumes
Crestwood achieved exceptional volumes in the Delaware Basin during this period. The company reported processing volumes reaching a quarterly record of 444 MMcf/d, representing 81% utilization of total capacity. Furthermore, natural gas gathering volumes averaged 535 million cubic feet per day, while crude oil gathering volumes averaged 28,000 barrels of oil per day.
This impressive performance can be attributed to a substantial increase in natural gas gathering and processing volumes year-over-year. The contributions of Sendero Midstream assets and significant volumetric growth on the Willow Lake gathering systems in New Mexico were key factors driving this notable boost.
Revised Projections for 2023
Despite the overall success in the Delaware Basin, Crestwood now anticipates connecting a total of 110 to 120 new wells throughout 2023. This represents a reduction of 10 wells from the previous guidance range. The adjustment is attributed to producers shifting their activity into 2024.
Positive Outlook for Williston Basin
On a positive note, Crestwood’s Chairman and Chief Executive, Robert G. Phillips, expressed optimism regarding production results in the western side of the Williston Basin. Phillips stated that the outcomes are surpassing expectations, which bolsters the company’s volume outlook for this particular region.
Crude Oil and Natural Gas Operations Report
During the second quarter of 2023, Crestwood reported that various gathering and processing volumes experienced changes. Crude oil gathering volumes averaged 86 MBbl/d, while natural gas gathering volumes averaged 231 MMcf/d. Additionally, natural gas processing volumes averaged 252 MMcf/d, and produced water gathering volumes averaged 195 MBbl/d.
Positive Trends in Crude Oil and Produced Water Gathering
Crestwood noted that there was a positive year-over-year increase in both crude oil and produced water gathering volumes. Specifically, crude oil gathering volumes rose by 13%, and produced water gathering volumes saw an 18% increase. These improvements were attributed to higher completion activities across the Arrow and Rough Rider assets.
Decrease in Natural Gas Gathering and Processing
On the other hand, natural gas gathering and processing volumes experienced a decrease compared to the previous year. Natural gas gathering volumes decreased by 4%, while natural gas processing volumes decreased by 6%. The reduced gas onloads to the Rough Rider system and increased downtime on legacy wells in the Arrow system were identified as the primary contributing factors for these decreases.
Steady Progress in Well Connections
Crestwood successfully connected 44 wells across the Arrow and Rough Rider systems during the second quarter. The company remains on-track to connect a total of 115 to 125 new wells throughout 2023, ensuring continued growth and expansion.
Powder River Basin Performance
In the second quarter of 2023, Crestwood reported natural gas gathering volumes of 99 MMcf/d and natural gas processing volumes of 96 MMcf/d in the Powder River Basin. Unfortunately, both these volumes experienced an 8% year-over-year decrease. Additionally, producers connected five wells to the Jackalope system during this period. Despite these challenges, Crestwood anticipates a total of 10 to 20 new wells from its dedicated customers in 2023.
NGL Storage and Inventory Build Season
Crestwood responded to the widening of the summer-to-winter spread during the inventory build season by building physical inventories across its Natural Gas Liquids (NGL) storage assets. These inventories are currently up over 50% compared to inventory levels from last year, positioning Crestwood advantageously in this market segment.
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