Holly Energy Partners and Plains All American Pipeline have formed a 50-50 joint venture for construction of a 160,000 barrel per day crude oil pipeline in Oklahoma, US.
Image: Holly Energy Partners and Plains All American Pipeline will construct new oil pipeline and terminal. Photo: courtesy of outgunned21/FreeImages.
Holly Energy Partners and Plains All American Pipeline have formed a 50-50 joint venture for construction of a 160,000 barrel per day crude oil pipeline in Oklahoma, US.
The pipeline will connect the Cushing crude oil hub to the Tulsa refining complex owned by a subsidiary of HollyFrontier and the ownership and operation of 1.5 million barrels of crude oil storage in Cushing.
Total investment for the project is nearly $130m
The total joint venture investment is estimated to total nearly $130m, which will be divided proportionately among the partners. It also includes the existing JV Terminal contributed by Plains valued at around $40m.
Holly Energy Partners general partner CEO George Damiris said: “The new Joint Venture will provide growth to HEP by insourcing logistics spend and provide the capability to supply 100% of HFC’s Tulsa Refinery crude throughput.
“Our partnership with Plains generates HEP growth while providing HFC long-term control of a strategic asset.”
The terminal is expected to be operational during the second quarter of next year, while the pipeline is planned to begin service during the first quarter of 2021.
To manage the construction and operation of the Pipeline, the joint venture will contract with an affiliate of HEP. It will contract with an affiliate of Plains to manage the operation of the terminal.
The joint venture assets will be supported by long-term commercial agreements.
Plains All American executive vice president – Commercial Jeremy Goebel said: “This win-win Joint Venture aligns with our strategy of optimizing existing assets to provide value-chain solutions for long-term industry partners in a capital efficient manner.
“This investment expands our relationship with a key operational hub service customer and provides additional long-term alignment on movements to the Tulsa refinery.”
In June 2018, Plains All American Pipeline and ExxonMobil had agreed to form a joint venture to construct a pipeline to transport crude oil and condensate from multiple locations in the Permian basin to the Texas Gulf Coast.