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Strategic JV for Red Oak Pipeline system

Published by
World Pipelines,


Phillips 66 and Plains All American Pipeline (Plains) have announced that they have formed a 50/50 joint venture, Red Oak Pipeline LLC, and are proceeding with construction of the Red Oak Pipeline system (Red Oak). The pipeline system will provide crude oil transportation service from Cushing, Oklahoma, and the Permian Basin in West Texas to Corpus Christi, Ingleside, Houston and Beaumont, Texas. Red Oak is underpinned with long-term shipper volume commitments. Initial service from Cushing to the Gulf Coast is targeted to commence as early as the 1Q21, subject to receipt of applicable permits and regulatory approvals.

“We are pleased to partner with Plains to build Red Oak,” said Greg Garland, Phillips 66 Chairman and CEO. “The pipeline provides a competitive outlet for shippers to access the key market centres along the Texas Gulf Coast from Cushing and the Permian. This investment aligns with our long-term strategy to grow our Midstream business with projects generating stable, fee-based earnings while further enhancing integration across our value chain.”

“Red Oak represents a capital-efficient industry solution that will utilise existing assets and provide pull-through benefits to our systems,” stated Willie Chiang, CEO of Plains All American. “We look forward to working closely with Phillips 66 and our committed shippers to bring Red Oak into service and further optimise our assets upstream and downstream of the new pipeline system. We also look forward to creating jobs and supporting economic growth in Oklahoma and Texas.”

The Red Oak joint venture will lease capacity in Plains’ Sunrise Pipeline system, which extends from Midland to Wichita Falls, Texas. The joint venture plans to construct a new 30 in. pipeline from Cushing to Wichita Falls and Sealy, Texas. From Sealy, the joint venture will construct a 30 in. pipeline segment to Corpus Christi and Ingleside and a 20 in. pipeline segment to Houston and Beaumont. Where feasible, Red Oak will utilise existing pipeline and utility corridors and advanced construction techniques to limit environmental and community impact. Plains will lead project construction on behalf of the joint venture, and Phillips 66 will operate the pipeline. The project is expected to cost approximately US$2.5 billion.

The joint venture plans to hold a supplemental binding open season to be announced at a later date that will enable additional shippers to enter into long-term transportation services agreements.

Read the article online at: https://www.worldpipelines.com/business-news/11062019/strategic-jv-for-red-oak-pipeline-system/

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US pipeline news Crude oil pipeline news