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ExxonMobil, Plains Eyeing Permian-to-Gulf Coast Pipeline

A plethora of Permian Basin crude oil and condensate pipeline projects can welcome another to the mix as ExxonMobil Corp. and Plains All American Pipeline LP are pondering a joint venture to transport more than 1 million b/d to the Texas coast.

The potential partners on Tuesday said they have a letter of intent to create a joint project, but no details were provided as to when the partnership could be in place.

“The proposed common carrier pipeline would be designed to ship more than 1 million b/d of crude oil and condensate, providing a safe, efficient and cost-effective option to transport ExxonMobil and other third-party production to market destinations in Texas,” Houston-based Plains said.
The West Texas pipeline as envisioned would originate in Wink and Midland, with delivery points east of Houston in Webster, Baytown and Beaumont, which are near the Houston Ship Channel.

“A priority would be placed on using existing pipeline corridors to help limit potential community and environmental disruptions,” Plains said.

ExxonMobil is one of the largest producers in the Permian, where it had 27 operated rigs running at the end of March. Since early 2014, it has snapped up an array of Permian-related deals to build an enviable position estimated at more than one million acres. The Permian resource total last year was estimated at around 6 billion boe.

Last fall, ExxonMobil snapped up its first crude oil terminal in West Texas to anchor its growing position in the Delaware sub-basin. The deal with Genesis Energy LP gave it a facility able to handle crude oil and condensate for transport to Gulf Coast refineries and marine export terminals.

Coincidentally, the Genesis terminal interconnects to Plains’ Alpha Crude Connector and is permitted for 100,000 b/d of throughput, with the ability to expand.

Plains also has another big West Texas-to-Gulf Coast connection in the works, Cactus II Pipeline, to transport crude to the Corpus Christi area in South Texas. Enough interest was shown in its first open season that it held another earlier this year to add 585,000 b/d of takeaway capacity.

Cactus II is comprised of existing pipelines and two new pipelines. Plains last year began expanding capacity to 390,000 b/d from McCamey to Gardendale, TX. The first new pipeline is to extend from Wink South to McCamey in Upton County, while the second new pipeline would extend to the southeast from McCamey to the Corpus Christi and Ingleside area on the Gulf Coast.

In addition, BridgeTex Pipeline Co. LLC, which is owned 50/50 by Plains and Magellan Midstream Partners LP, is expanding capacity from the Permian to 400,000 b/d from 300,000 b/d. The 20-inch diameter system carries crude from Colorado City in West Texas to the Houston area. Beginning early in the second quarter, a new origin point at Bryan, TX, which is 100 miles northwest of Houston, was to begin operations to accept shipments from the Eaglebine region for delivery also to Houston.

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