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Oil Pipeline Joint Venture

Brian Hicks

Written By Brian Hicks

Posted August 8, 2012

In a newly formulated joint venture, Plains All American Pipeline, L.P. (NYSE: PAA) and Enterprise Products Partners L.P. (NYSE: EPD) will consolidate parts of already-planned pipeline projects in the Eagle Ford Shale.

The arrangement is an even, 50/50 split. This joint effort means both increased flexibility in the markets for shippers, as well as better capital management for Plains and Enterprise.

A 140-mile pipeline from LaSalle County all the way to Corpus Christi and a 35-mile segment from Three Rivers to Wilson County will be combined in the joint venture.

It is expected that the system, when complete, will lead to a capacity of 350,000 barrels per day and a total system-wide operational storage capacity of 1.8 million barrels. There will also be a marine terminal at Corpus Christi, while the Wilson County pipeline will connect with Enterprise’s South Texas Crude Oil pipeline. This, ultimately, will transport crude to Houston refineries.

Some segments will begin service in late 2012, with the rest coming online in early 2013. An initial base tariff rate of $1.25 per barrel is expected from the LaSalle origin point to all programmed delivery points.

From the press release:

“We are very pleased to work with Enterprise to optimize our respective construction activities in South Texas. This joint venture provides necessary take-away capacity for the growing Eagle Ford region, while reducing capital costs and enhancing returns for both parties,” said Harry Pefanis, President and Chief Operating Officer of Plains All American Pipeline. “The combined project will provide shippers with the option to deliver to Three Rivers, Corpus Christi, Houston, and with dock capabilities at Corpus Christi to access other gulf-coast markets.”

Plains All American operates widely in the oil and refinery products sector. It is involved in storage, transportation, and marketing these products, and it also processes, transports, and markets natural gas liquids.

Enterprise Products is a major North American provider of midstream energy services for crude, natural gas, and petrochemical products.

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