Oil production in the Denver-Julesburg Basin is slowing, which means competition has intensified for committed barrels. The four main transmission pipelines (Pony Express/Seahorse, Saddlehorn, Grand Mesa and White Cliffs) have all launched open seasons to secure minimum volume commitments (MVCs).
East Daley Analytics’ Crude Hub Model includes historical and forecasted flows by pipeline from the DJ Basin. We expect oil production to decline slightly through 2025 and 2026 as a result of modest drilling activity and as new wells produce relatively more natural gas.
The Pony Express/Seahorse pipelines owned by Tallgrass Energy Partners have been highly successful, achieving >90% utilization since 2H23. Pony Express has a key advantage given it can access volume from multiple receipts points in the basin, including the northeast corridor to Laramie County, WY and connecting to Guernsey, WY. From there, a joint tariff with Bridger Pipeline enables commitments of Bakken and Powder River barrels. Pony Express also delivers to multiple refineries in Kansas and to the Cushing market. Since 2023, Tallgrass has held several open seasons to effectively convert volumes to MVCs.
The Saddlehorn and Grand Mesa pipelines operate as an undivided joint-interest pipeline, under which the companies own distinct capacity on the one asset. NGL Energy Partners’ Grand Mesa holds ~1/3, and Saddlehorn owns the remaining ~2/3 and is the operator. Plains All American (PAA), Chevron (CVX) and ONEOK (OKE) own Saddlehorn.
Saddlehorn Pipeline has been running full since 2024, benefiting from additional connectivity to PAA’s Cheyenne and Cowboy pipelines that move Bakken and Powder River volumes. Saddlehorn has also held numerous open seasons the last few years to secure MVCs.
Grand Mesa has been a holdout, preferring to maintain the status quo until tariffs return to the pre-Covid levels of ~$6.50/bbl. Additionally, Grand Mesa has limited connectivity to only core areas in the DJ. However, Grand Mesa recently held an open season and successfully secured an acreage commitment with Prairie Operating (PROP), potentially increasing Grand Mesa’s utilization to ~70%.
Owned by Energy Transfer (ET) and PAA, White Cliffs Pipeline is the DJ’s oldest transmission line. In 2021, the White Cliffs twin line was converted to NGL service while the original pipeline is still transporting crude oil. White Cliffs has seen volume decline from 70% average utilization in 1H24 to 45% in 3Q24. However, White Cliffs recently announced an open season to attract committed volumes, suggesting operator ET is attempting to keep up with the competition. – Kristy Oleszek Tickers: CVX, ET, OKE, NGL, PAA, PROP.
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