Three companies plan to build a pipeline from the Permian Basin to Corpus Christi.
Three companies have raised $1 billion to build a 730-mile oil pipeline from the heart of West Texas to the Gulf of Mexico in Corpus Christi in what would be the state’s longest pipeline since at least 2008.
The “EPIC” pipeline — which stands for Eagle Ford, Permian, Ingleside and Corpus — would transport upwards of 440,000 barrels per day of crude oil and condensate out of the Permian Basin Shale field to the Corpus Christi region when it comes online in the first quarter of 2019. Additionally, Eagle Ford connections could add upwards of 150,000 barrels of capacity, bringing the total to 590,000 barrels a day.
“The Permian production is growing at an incredible rate, with lots of money being spent on acquiring acreage, and the rig counts continue to grow,” said Jeff Dorrow, the vice president of business development for TexStar Midstream Logistics, the lead company on the project.
The pipeline to the Corpus Christi port is necessary since the refineries in the Houston market are all full, Dorrow said. The port has become more important as U.S. production takes off. Almost $1.5 billion in oil was exported out of Corpus Chirsti last year, according to the website U.S. Trade Numbers. The port’s site says over 29.7 million tons of crude oil was outbound from the port in 2015, which would equal over 217 million barrels for the year, or 600,000 barrels of oil a day.
With Texas drilling more oil than it can handle, “the next barrel that’s going to be produced is going to hit the water and be traded on the waterborne market,” Dorrow said. “Corpus is the shortest distance and the most effective way to get a barrel from the Permian into an on-the-water.”
The Sand Hills Pipeline, built by Denverbased DCP Midstream in 2011, is almost as long at 720 miles. It carries natural gas liquids from West Texas through South Texas, ending near Houston. The EPIC pipeline is more than half the size of the Keystone XL pipeline extension that TransCanada Corp. has been trying to build since 2012. The Keystone would be 1,179 miles long and would transport a maximum of 830,000 barrels per day of crude from Canada into Nebraska.
The EPIC pipeline project is being developed by San Antonio-based midstream company TexStar, Texas-based midstream company Ironwood Midstream Energy Partners and Stamford, Conn.based commodities trader Castleton Commodities International.
Calls to Castleton were not returned.
Dorrow said the companies have obtained at least 10 percent of the right of way and that Castleton has permitted and engineered a new waterborne terminal at the Port of Corpus Christi’s Inner Harbor. The terminal will have upwards of 1 million barrels of storage capacity in addition to a 3 million barrel storage facility near Taft, a town on the north side of the Nueces Bay.
Construction is set to begin in June and is scheduled to be completed by March 2019.
The project is being funded by private equity investors, but Dorrow would not say who or what institutions may be involved. An “open season” has been declared for bidding on the first 200,000 barrels of pipeline capacity that will be closed in the next 45 days.
The new pipeline will be the second Permian Basin-to-Corpus Christi regional project. Houston-based Plains All American owns and operates Cactus Pipeline, which moves 250,000 barrels of oil a day and is expanding to 390,000 barrels per day.