McClendon taps Tall Oak for midstream work

Midstream: McClendon moves in

An affiliate of shale pioneer Aubrey McClendon's American Energy Partners is working with upstart Tall Oak Midstream to build a gas gathering and processing system in northern Oklahoma to handle production from certain unconventional plays in the region.

American Energy – Woodford (AEW), one of the suite of regionally-focused shale companies McClendon has formed since his ouster as head of Chesapeake Energy, will anchor Tall Oak's system in what is known as the Central Northern Oklahoma Woodford (CNOW) play with a long-term acreage dedication.

The system will serve multiple producers targeting liquids-rich, stacked pay zones including the Mississippi Lime, Woodford shale and Cleveland formations.

It will initially encompass a 250-mile, low-pressure gas gathering system with multiple compression sites and a cryogenic processing plant dubbed Battle Ridge in Payne County. The plant is expected to be in service in December this year with an initial capacity of 75 million cubic feet per day.

AEW contributed its 60 miles worth of existing gathering lines in exchange for a minority interest in the Tall Oak CNOW system. The McClendon-led company also has an option to take up to a 50% non-operated interest in the system.

American Energy Partners announced last week that it was forming its own midstream unit to service areas where it has upstream operations.

Tall Oak, which was founded early this year, is supported by a total of $400 million in private equity commitments from EnCap Flatrock Midstream.

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