Western Midstream (WES) is poised to gain natural gas volumes at a processing plant in the Uinta Basin, thanks to recently announced agreements tied to broader expansions by Williams (WMB) and Kinder Morgan (KMI).
East Daley Analytics recently covered the growing midstream investments in the Uinta. Under the first agreement, WES will support WMB’s MountainWest Pipeline expansion, providing up to 110 MMcf/d of firm processing at its Chipeta plant in northeastern Utah. In its 3Q24 update, WES noted it has started receiving some of these volumes from Williams and expects more growth in the months ahead.
The second agreement supports KMI’s Altamont Green River Pipeline project. WES will contribute 150 MMcf/d of firm processing capacity at Chipeta starting in mid-2025. These collaborations strengthen WES’s strategic position in the Uinta and will support regional production growth.
EDA tracks the Chipeta complex in Energy Data Studio. The plant processed an average of 290 MMcf/d in 3Q24, well below its 790 MMcf/d inlet capacity (see figure from the “G&P System Analysis” dashboard in Energy Data Studio). We currently allocate 1 rig to the Chipeta system, with Caerus Oil and Gas and Koda Resources as the two primary customers.
The new contracts will help bolster earnings for Western’s Uinta segment, which had volumes from prior commitments roll off at YE22. East Daley estimates that if all the firm pipeline capacity with KMI and WMB is fully used, WES would gain potential EBITDA of ~$44MM a year from mid-2025 onward, representing an ~2% lift to company EBITDA. – James Taylor Tickers: KMI, WES, WMB.
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