Hi-Crush Partners LP and ARB Midstream LLC announced that the companies have entered into definitive agreements to jointly develop and operate two energy rail hubs, one in the DJ Basin and one in the Permian Basin. Both facilities will be served by the Union Pacific Railroad, and will provide unit and manifest train capabilities for frac sand and crude oil. Hi-Crush will operate the frac sand terminals at these facilities, with the frac sand sourced from its production facilities in Wisconsin, and ARB will operate the crude-by-rail terminals.
"By establishing a presence in the DJ Basin and significantly expanding our presence in the Permian Basin, we are excited to further expand our extensive distribution network to better serve our customers' in-basin needs," said Robert E. Rasmus, co-chief executive officer of Hi-Crush. "We remain focused on delivering a low-cost solution to our customers and look forward to a successful partnership with ARB."
"ARB is excited to partner with Hi-Crush on these projects," said Adam Bedard, chief executive officer of ARB. "Entering a long-term relationship with one of the leading providers of frac sand is complementary to our vision of growth providing integrated terminals to the oil and gas industry in North America."
Hi-Crush and ARB are jointly developing Nicon, a 225-acre site in Weld County, Colo., in the heart of the DJ Basin. The frac sand infrastructure will include silo storage capacity, allowing Hi-Crush to accommodate unit trains. The crude oil infrastructure will accommodate multiple grades of crude oil and have initial storage capacity of 200,000 barrels, expandable to over 400,000 barrels. Rail-loading capacity will be approximately 79,000 barrels per day of crude oil, with initial truck unload capacity of 35,000 barrels per day. Hi-Crush and ARB expect the Nicon facility to be commercially operational in the fourth quarter of 2015.
The Permian Gateway energy rail hub is proposed on 300 acres in Howard County near Big Spring, Texas. ARB has entered into a definitive agreement to purchase the acreage with the closing expected to occur in May, subject to customary closing conditions. The frac sand infrastructure will include silo storage capacity, allowing Hi-Crush to accommodate unit trains. Hi-Crush and ARB expect the Permian Gateway energy rail hub to be commercially operational by early 2016.
“There is a lack of terminal capacity for proppant and crude oil in the Big Spring region,” said Bedard. “Our terminal will provide the critical infrastructure to serve our customers' in-basin needs, with the crude oil terminal being pipe connected to a large, regional gathering system.”