Plains completes pipeline, adds more partners
Plains All American said it completed its Cactus II oil pipeline from West Texas to the Corpus Christi area and added new partners to develop another major Permian pipeline project tomove crude to Houston.
These projects are each considered major steps toward relieving the pipeline shortage woes in the booming Permian Basin. Many companies have slowed their activity or turned to trucking crude because of a shortage of pipelines to carry oil across the state to the major refining and port hubs in Houston and Corpus Christi.
The $1.1 billion, 515-mile Cactus II project will start partially flowing crude oil next week and become fully operational in the first quarter of 2020, said Plains Chief Executive Willie Chiang during the company’s earnings call late Tuesday.
Plains’ Wink to Webster crude pipeline project with Exxon Mobil also ismoving closer to fruition with an anticipated 2021 opening date. The 650-mile crude oil systemis expected to cost more than $2 billion. From the Houston area, the pipeline system would link up to existing systems to carry more crude to Beaumont.
Exxon Mobil is by far the most active driller in the Permian with more than 50 rigs at work. Exxon is producing nearly 300,000 barrels of oil equivalent in the region with plans to rapidly growth to 1 million barrels daily from the Permian by 2024. The Wink to Webster pipeline is key to transporting Exxon’s oil to its refining
systems in Baytown and Beaumont.
Permian oil production has skyrocketed to nearly 4.2 million barrels a day, accounting formore than one-third of the nation’s record output. As a state, Texas is is producing a record 5 million barrels a day of oil. The Permian produced less than 1 million barrels daily in 2010 and less than 2 million in 2015.
Plains said it added three additional partners on its Wink to Webster project: Marathon Petroleum’s pipeline spinoff, MPLX; Israel’s Delek; and Diamondback Energy’s pipeline spinoff, Rattler Midstream Partners of Midland.
MPLX and Delek decided to teamup with Plains and Exxon after another major crude pipeline project they planned to develop was scrapped this spring.
Houston-based Lotus Midstream already was another partner on the Wink to Webster projectwith Plains and Exxon. Chiang said they’re still expected to add one other partner to the project.
With the new partners, Plains will decrease its ownership stake from 20 percent to 16 percent. Plains will continue to lead the project.