Meritage Midstream Services II LLC announced Dec. 18 that operations on the first leg of its NGL pipeline serving Wyoming's Powder River Basin will begin in January 2015.

The FERC-regulated pipeline will be owned and operated by Thunder Creek NGL Pipeline LLC, a wholly owned subsidiary of Denver-based Meritage.

The 108-mile pipeline serves producers in Wyoming’s prolific Powder River Basin and consists of 22 miles of newly constructed pipeline and an additional 86 miles secured through a long-term lease from Phillips 66 (NYSE: PSX). The pipeline has an initial capacity to transport 15,000 barrels per day (bbl/d). Meritage expects to expand the pipeline’s capacity to 30,000 bbl/d as shipper demand increases.

The pipeline originates at the 50 Buttes Natural Gas Processing Complex near Gillette, Wyo., and terminates at an interconnect with Phillips 66’s Powder River Pipeline near Douglas, Wyo. The Phillips 66 Powder River Pipeline delivers NGL to Phillips 66’s fractionation and refining complex near Borger, Texas. The 50 Buttes Plant is owned by Thunder Creek Gas Services LLC, also a wholly owned subsidiary of Meritage.

Meritage also announced that it will begin construction of a 140-mile extension of the NGL pipeline in early 2015. The 140-mile extension will include an interconnect near Cheyenne, Wyo., into the Overland Pass Pipeline Co.’s 760-mile pipeline that provides NGL deliveries to the Midcontinent market center in Conway, Kan. This extension is expected to come into service during the first quarter of 2016.

“We are very pleased that our new NGL pipeline will provide producers in the Powder River Basin with rapid access to market and improved netbacks,” said Steve Huckaby, Meritage Midstream CEO, in a statement. “Our focus is always on what’s best for our customers and this initial pipeline is a great intermediate solution while we continue to build out the system to offer connectivity to additional markets, including market centers at Conway, Kan., and potentially Mont Belvieu, Texas.”