Plains All American Pipeline said Monday it will build a 310-mile, 20-inch pipeline to move crude oil across West Texas.
The Cactus Pipeline is expected to begin service in the first quarter of 2015. It will move both sweet and sour crude from McCamey to Gardendale, according to the announcement.
Total investment is expected to be as much as $375 million.
The partnership said it has entered into a letter of intent with a third party regarding a long-term commitment for a majority of the pipeline’s capacity and is in discussions with other potential shippers for the remaining capacity.
Initial capacity will be approximately 200,000 barrels per day, although the company’s announcement said that could be increased as demand warrants.
Plains All American Pipeline is a publicly traded master limited partnership based in Houston, engaged in the transportation, storage, terminaling and marketing of crude oil and refined products, as well as the processing, transportation, fractionation, storage and marketing of natural gas liquids.
The company has been aggressively investing in new projects as part of its plan for growth.
In December it announced a $500 million deal with Houston-based U.S. Development Group to buy crude oil rail terminals in three of the nation’s most active shale plays: the Eagle Ford in South Texas, the Bakken in North Dakota, and the Niobrara in Colorado, along with an existing unloading terminal in St. James, La., and one under development in Bakersfield, Calif.
MATCOR’s Insight That Works
The new pipeline is a strategic move for all parties involved. The Cactus Pipeline will run crude from the Permian to the Plains All American/Enterprise Products Partners Eagle Ford Joint Venture Pipeline, which serves the Three Rivers and Corpus Christi markets. The Three Rivers and Corpus Christi markets are booming with the current opportunities in the Eagle Ford Shale. That venture can also serve the Houston-area market through a connection to the Enterprise South Texas Crude Oil Pipeline, according to the Plains announcement.
The Cactus Pipeline is a long term investment. It is servicing a lucrative area that holds a large amount of promise both in economic and geological terms. However, the pipeline appears to be a complex project that will require expert coordination of pumps, valves, cathodic protection equipment and more.
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