Apache Corp.’s Altus Midstream Co. said it opened its new Permian Basin processing plant to treat its production of natural gas and natural gas liquids.
The announcement comes after Houston-based Apache said in April it was dramatically cutting back on its natural gas production in the Permian Basin for now because of steep pricing discounts caused by pipeline and processing plant shortages in the region.
The opening of Altus new Diamond Cryo Complex in Apache’s Alpine High portion of the Permian could soon get Apache’s gas output moving again. Altus said it started up the first of three cryogenic processing facilities, called trains, this week with the other two expected to come online later this year.
The plant is expected to help process large volumes of purer streams of natural gas and NGLs, including ethane, propane and butane.
Altus launched late last year as a publicly traded spinoff of Apache’s pipeline and processing facilities.
Apache’s emerging Alpine High development in the Permian is expected to produce large volumes of gas in addition to crude oil output. There’s so much associated gas produced along with crude oil that many companies are having to pay to have the excess gas shipped away. Either that or they’re simply flaring more of the gas and burning it into the atmosphere, contributing to pollution and climate change.
That’s why Apache opted to temporarily scale back on its production, especially in the gassier areas of the Alpine High.
“This is the proper approach from both an environmental and economic perspective relative to other industry practices such as flaring or selling associated gas at a negative or unprofitable price,” said Apache Chief Executive John Christmann in April.
But the new processing plant can help Apache ramp its activity back up in the relatively near future.
Altus also announced it closed on its acquisition of a large stake in Kinder Morgan’s Permian Highway Pipeline to carry natural gas from the Permian to the Houston area. The pipeline is expected to be completed by October 2020.
Altus now owns a 26.7 percent stake in the pipeline project.