In December, Plains All American Pipeline LP announced plans to build a 16-inch, 226 mile long pipeline from the Plains Basin crude oil pipeline system in Duncan, Oklahoma, to Longview, Texas. The pipeline is expected to be completed by second quarter 2016.
Plains All American Pipeline LP and Plains GP Holdings, LP also signed an agreement with Occidental Petroleum Corporation to purchase Occidental’s 50% interest in Bridge Tex Pipeline Co., LLC. The agreement was reportedly for a $1.075 billion purchase price.
Plains All American Pipeline LP is a publicly-traded limited partnership with headquarters in Houston, Texas.
The pipeline project was welcome news for the oil and gas industry, where output and prices for crude oil from some drilling areas have been impacted by a lack of infrastructure to move the oil to refineries or the oil pipeline hub at Cushing, Oklahoma. This summer, demand for pipeline capacity had grown so quickly that Enterprise Product Partners, a Houston-based oil and gas company, filed a request with the Federal Energy Regulatory Commission (“FERC”) to enact a lottery system as a way for shippers to get pipeline space. The FERC filing stated as an example that in 2014, 214 new shippers submitted nominations totaling 1.8 million barrels per day of crude oil from the Permian basin, where the existing pipelines have a capacity of 450,000 barrels per day. This demand and lack of adequate capacity resulted in the stranding of crude oil, and lower prices per barrel.
For further updates, stay tuned to this blog, or contact Toni Ellington at (504) 599-8500.
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