Meritage Midstream Services II, LLC, and Arch Coal, Inc., have written a letter of intent to create a joint venture. The new entity, to be called Black Thunder Terminal, LLC, will develop a rail terminal to provide crude oil handling, storage, rail loading and marketing services to producers in Wyoming's Powder River Basin and downstream refiners.
Arch Coal will contribute reclaimed land, rail switching and loop and other existing infrastructure assets at its Black Thunder mining complex in Campbell County, Wyo. Meritage will contribute capital and will build and operate the crude oil terminal on property east of Arch’s active operations and located near the basin’s crude oil production activity. Meritage will own the majority interest in Black Thunder Terminal, LLC.
Because much of the required rail infrastructure is already in place, early stage crude oil transloading operations from inbound trucks to outbound trains are expected to begin at Black Thunder as early as September 2013. As demand from producers and refiners warrants, the Black Thunder Terminal will have the ability to increase outbound shipping capacity from 10,000 barrels per day in the initial phase to 120,000 barrels of crude oil per day via outbound unit train. Significant acreage is available for further expansions. The terminal will be served by BNSF.
“This is an exciting day for both companies, as well as the Powder River Basin. With an ideal land position and significant infrastructure already in place at its Black Thunder mine, Arch is the perfect partner for Meritage on this project,” said Meritage Chairman and CEO Steve Huckaby. “We’re excited this joint venture will provide crude oil producers in the Powder River Basin with the optionality they need to bring their products to multiple markets. This is a natural, common-sense and forward-thinking partnership that will produce a positive outcome for both companies and its customers and investors – as well as the region and the country.”
“We’re pleased to welcome Meritage Midstream to the Black Thunder mining complex. This joint venture will allow us to further optimize our assets and unlock the value of our existing infrastructure without any impact to our coal loading operations,” said Paul Lang, executive vice president and COO of Arch Coal. “This joint venture is a great fit for Arch. Our Black Thunder complex is ideally situated in the PRB, the required infrastructure and logistics are in place and we already have a strong working relationship with the Meritage team.”
The proposed joint venture between Arch Coal and Meritage is subject to approvals, which is expected in three to six months.