Cactus

ConocoPhillips Co. and Encana Marketing (USA) Inc. are challenging Plains All American’s plans to implement a surcharge on its Cactus II crude oil pipeline, a 5.0-cent/bbl fee designed to offset costs related to U.S. tariffs on steel imports.

Faced with higher costs because of U.S. tariffs on imported steel needed for its pipeline buildout, Plains All American LP is moving forward with a surcharge to make up the difference as it seeks an exemption from the Department of Commerce, according to management.

A subsidiary of Plains All American Pipeline LP (PAA) said it is proceeding with constructing the Cactus II Pipeline in West Texas, connecting the Permian Basin to the Corpus Christi area in South Texas after receiving sufficient binding commitments on its initial open season for the oil pipeline.

Plains All American Pipeline LPandEnterprise Products Partners LPare expanding their Eagle Ford Joint Venture (JV) crude oil pipeline to 470,000 b/d of light and medium crude grades to accommodate additional volumes expected from Plains’ Cactus pipeline, which is under construction. The expansion is expected to cost $120 million and be in service in the second quarter of 2015. The Eagle Ford system, most of which is in service and expected to be completed by Sept. 30, serves the Three Rivers and Corpus Christi refineries and other markets via marine transport facilities at Corpus Christi. The Cactus Pipeline is being constructed by Plains from McCamey, TX, in the Permian Basin area to Gardendale (seeShale Daily,April 16). It will have an initial capacity of 200,000 b/d and is expected to be in service in the second quarter of 2015.