CenterPoint Energy’s effort to grow its oil pipeline business got a major boost Tuesday, as it said it had signed a long-term agreement with Exxon Mobil Corp’s XTO Energy subsidiary to move hydrocarbons produced in North Dakota.
The deal gives Houston-based CenterPoint its first customer for a pipeline system under construction in the Bakken shale play. The system will be able to gather and move oil produced from wells in McKenzie and Dunn counties, with a capacity of about 19,500 barrels per day.
Pipeline capacity has been a major constraint for booming oil output in the Bakken, where producers have struggled to find outlets for their hydrocarbons, turning to trains and other methods to move oil east and south.
Another solution: New refineries planned for Bakken Shale
“We are extremely pleased to provide long-term crude oil gathering services for such an outstanding producer, and we appreciate the confidence they have placed in our current and expanding capabilities,” said C. Gregory Harper, senior vice president and group president of CenterPoint Energy’s Midstream business, in a statement. “Our excellent track record of developing gathering systems on time and on budget continues to provide us with opportunities, and positions us to execute our strategy of expanding into liquids-rich basins.”
CenterPoint is known to Houstonians mostly for its role as the owner of most of the transmission lines and meters in the city. It is increasingly expanding its pipeline activity, reaching further into opportunities to move crude and natural gas from shale plays.
Iriving-based Exxon Mobil Corp. bought XTO Energy in 2010 for $25 billion.