Energy company has big plans for Colorado oil and gas fields
By Cathy Proctor – Reporter, Denver Business Journal
Apr 9, 2018 – Updated Apr 6, 2018 4:43pm MDT
Josh Cruzan, the CEO of Rimrock Energy Partners LLC, isn’t one to walk away from a good thing — in this case Colorado’s prolific Denver-Julesburg (DJ) Basin.
Cruzan figures he and his management team have been working in the northern Colorado oil and natural gas field since 2005 for a series of companies, including SemGroup Energy Partners, the Oklahoma-based oil and gas transporter, and the first incarnation of Rimrock — Rimrock Midstream LLC.
But while Rimrock Midstream focused on crude oil, its successor Rimrock Energy, backed by Dallas-based private equity firm Energy Spectrum Capital, is focused on gathering and processing natural gas.
The company in November bought land in Weld County near Pierce, about 15 miles north of Greeley, to build a cryogenic natural gas processing plant and about 30 miles of pipelines linking the plant to oil and gas wells in the field.
“It’s an area that we think we have a good understanding of and we feel good about the opportunities. It’s a growing basin with promising results,” said Kevin Bailey, Rimrock’s COO and also a partner in the company.
The plant and pipelines are expected to cost about $200 million, a figure that could rise to $300 million over the years if the plant is expanded to accommodate increased production in the area, company executives said.
The first phase of the plant, expected to be complete in the first quarter of 2019, will be capable of processing up to 200 million cubic feet of natural gas per day. There’s also space to expand the plant to handle an additional 200 million cubic feet per day — if there’s a demand for it.
“As part of the crude oil production there’s natural gas that also comes out of the well. We take the gas from the wellpad, process it and make it into a sellable product for downstream markets,” Bailey said.
Rimrock chose to put the plant on the north side of the DJ because “we feel that area hasn’t had as much gas infrastructure as areas that are further south,” Bailey said.
The new plant will allow operators in the area to move ahead with plans to drill new wells, knowing the natural gas can be piped and processed, he said.
A cryogenic natural gas processing plant uses extreme cold, typically around -120 degrees Fahrenheit, to separate natural gas from other elements, such as ethane, propane and butane, which have their own markets and transport systems.
The company also is building 30 miles of pipelines to bring raw natural gas from wells in the field to the processing plant.
Cruzan said the company, which opened a new Denver office in March, and its management team saw an opportunity to help producers in the DJ Basin grow the natural gas side of their operations.
The company’s headquarters is in Dallas, it also has an office in Oklahoma City.
“We have a lot of relationships with producers from before, when we built a 20-inch pipeline for crude oil and 100 miles of gathering lines,” Cruzan said.
Rimrock Energy expects to have eight people in its office downtown and up to 30 people at the plant location near Pierce, he said.
Rimrock Midstream gathered Colorado crude from the field and moved it out of state via the Platte River gathering system of pipelines and the Grand Mesa Pipeline which runs between Weld County and the nation’s major oil storage hub in Cushing, Oklahoma.
NGL Energy Partners LP, based in Tulsa, Oklahoma, bought out Rimrock’s 50 percent interest in the Grand Mesa Pipeline in 2014. Rimrock then sold a controlling interest in the Platte River gathering system to another Denver-based private company, ARB Midstream LLC, in 2016.
With Rimrock Energy “we’re picking up the north and northwest side of the field,” said Chris Mitchell, a partner in Rimrock Energy and the former president and COO of the first Rimrock.
Cruzan said continuing to work in Colorado also makes it easy for the company to hire good people from throughout the industry.
“When you’re trying to attract talent and the choices are Denver or Odessa [Texas], it’s easier to attract them to Denver,” he said.