First crude unit train departs Meritage Midstream’s Black Thunder Terminal

June 25, 2014

Meritage Midstream Services II LLC announced that the first crude oil unit train loaded at its Black Thunder Terminal departed the Wyoming terminal on June 20, via the Union Pacific railway. The Black Thunder Terminal LLC is a joint venture between Meritage Midstream and Arch Coal.

Served by both the Union Pacific and BNSF railways, the terminal is strategically located at the Black Thunder mining complex in Campbell County, Wyoming, in the heart of the Powder River Basin’s drilling activity. The Black Thunder Terminal provides outbound rail-to-market optionality for crude oil production from Wyoming’s Powder River Basin.

“Partnering with Meritage at Black Thunder Terminal not only helps us unlock additional value of our existing land holdings and infrastructure, but also provides us with a diversified interest in the growing shale oil market”

The 99-car train is carried 70,000 barrels of crude oil to a refinery on the East Coast for the terminal’s anchor shipper, Black Thunder Marketing LLC. All of the train’s tank cars are new and meet the stringent safety standards adopted earlier this year by the American Association of Railroads.

Phase I truck-to-train transload service has been fully operational at Black Thunder since the beginning of March. Current transload capacity is 10,000 barrels per day. Landing and loading space is available. Construction of Phase II high-speed loading facilities is expected to begin later this year.

The Phase II facility will include up to four 100,000-barrel storage tanks and a 15-car rack system capable of loading 15 to 18 cars per hour. Target total loading time is 15 hours. High-speed loading service is expected to be available in 2015. The terminal’s location at the Black Thunder mining complex provides ample room for additional expansion to meet customer needs.

“The beginning of operations as one of the first dual-served, multishipper unit train facilities in Wyoming is an enormous achievement for our team,” says Steven B Huckaby, Meritage Midstream chief executive officer. “The Black Thunder Terminal is a unique and important strategic asset for oil producers in the Powder River Basin. We are grateful to our joint venture partner Arch Coal and the Union Pacific and BNSF railways for working with Meritage to offer our crude oil customers flexible and efficient access to multiple markets across the country.

“The Black Thunder facility is unique because it’s the only crude oil terminal in Wyoming located at a coal mine. When we formed the joint venture with Arch Coal, our vision was to create a win-win situation for our customers and the terminal partners. We created significant cost savings for our crude oil customers as well as efficiencies at Black Thunder by successfully repurposing some of the mine property and rail infrastructure for transloading crude oil. It’s a great location in the center of drilling and production activity and a perfect fit for everyone at the table.”

Paul A Lang, Arch Coal executive vice-president and chief operating officer, says: “Partnering with Meritage at Black Thunder Terminal not only helps us unlock additional value of our existing land holdings and infrastructure, but also provides us with a diversified interest in the growing shale oil market.”

Meritage also announced two additions to the company’s crude oil team. Trevin Hogg joins the company as director of crude oil rail operations and marketing. His current focus is the operation and marketing of the Black Thunder Terminal and Black Thunder Marketing, LLC. Before he joined Meritage, Hogg was with Union Pacific for nine years. He led the development of Union Pacific’s crude-by-rail business from the inception of the business line in 2009. He has deep expertise with North American transportation markets, crude markets and terminal development and has worked closely with crude oil producers and commodity traders. Hogg is a former Navy search and rescue swimmer and a graduate of the University of Nebraska, Omaha, where he earned a Master of Business Administration.

Richmond McGee also joins Meritage Midstream as senior crude manager. He helps manage Black Thunder Marketing, LLC with responsibilities that include supply management and business development. Prior to Meritage, McGee served as a manager of crude oil supply at Sunoco Logistics in Sugar Land TX, where he worked closely with the company’s producer customers. Before establishing a career in the oil industry, McGee played in the National Football League with the Philadelphia Eagles, Chicago Bears, and Cleveland Browns. He is a graduate of the University of Texas, where he studied petroleum engineering and kinesiology.