UPDATE 1-Tallgrass sees Pony Express pipeline start up in September

Wed Aug 6, 2014 6:53pm EDT

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(Adds quotes, detail about delayed feeder pipeline, other volumes)

HOUSTON Aug 6 (Reuters) - Tallgrass Energy Partners LP expects the Pony Express crude pipeline to start up next month and linefill and final testing is under way, Chief Executive David Dehaemers told analysts on Wednesday.

The 690-mile (1,110 km), 230,000 barrels-per-day (bpd) to 320,000 bpd pipeline runs from Guernsey, Wyoming, to the U.S. crude futures hub in Cushing, Oklahoma. Dehaemers said another pipeline that will feed 38,000 bpd into Pony Express has been delayed, but executives expect other producers to bring in uncontracted volumes.

Dehaemers did not identify the delayed pipeline.

Hiland Partners, a privately held midstream company chaired by Continental Resources Inc Chief Executive Harold Hamm, had planned an August startup for its 450-mile (724 km), 50,000 bpd Double H pipeline from Dore, North Dakota, to Guernsey. The line was built to move Bakken crude to the Pony Express, which would carry it to Cushing.

Multiple executives at Hiland did not immediately respond to inquiries on Wednesday about the status of the Double H pipeline.

On Pony Express, Dehaemers said construction was "substantially finished" and crude from both Wyoming and Cushing was filling both ends.

"We are down to the two-yard line and we're going to punch the ball in," he said.

Dehaemers said 90 percent of the pipeline's capacity was required to be contracted, with 10 percent left open for uncontracted "walk up" shippers.

Nearly all the barrels at Guernsey will arrive via rail or truck, he said.

Chief Operating Officer Bill Moler added that Guernsey is near the Powder River and DJ basins in Colorado and Wyoming, so the company expects some crudes from those areas to supplant the 38,000 bpd of delayed volumes.

"We don't necessarily expect Bakken barrels to fill the walk up," he said.

Dehaemers also said the company has "every indication" that Pony Express volumes will be light crudes rather than Canadian heavy. (Reporting By Kristen Hays; Editing by Chris Reese and Andre Grenon)

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