Open Season Announced for Saddlehorn Pipeline Expansion

Saddlehorn Pipeline Company, LLC has announced the expansion of Saddlehorn pipeline and has launched an open season to solicit long-term commitments for capacity on the pipeline system. The company will also add the new Ft. Laramie origin by leasing capacity on third-party pipelines.

The pipeline’s current transportation capacity is 190,000 barrels per day of crude oil and condensate from the DJ and Powder River Basins to storage facilities in Cushing, Oklahoma owned by Magellan and Plains. The expansion will increase pipeline’s capacity by up to 100,000 barrels per day, which will mark a new total capacity of 290,000 barrels per day.

Following the addition of incremental pumping and storage capabilities, the higher capacity is expected to be available in late 2020. The company announced that interested customers must submit binding commitments by 12:00 p.m. Central Time on 31 July, 2019.


Philips 66 Enters Joint Venture to Build $2.5 Billion Red Oak Pipeline

Phillips 66 has teamed up with Plains All American Pipeline LP to construct the $2.5 billion Red Oak Pipeline system that will deliver crude oil from Cushing, Oklahoma, and the Permian Basin in West Texas to Corpus Christi, Ingleside, Houston and Beaumont, Texas.

The plan is to build a 30-inch pipeline from Cushing to Wichita Falls and Sealy, Texas. It also will build a 30-inch pipeline segment from Sealy to Corpus Christi and Ingleside and a 20-inch pipeline segment from Sealy to Houston and Beaumont.

The company expects to commence initial service as early as the first quarter of 2021. As per the release, Plains will handle project construction and Phillips 66 will operate the pipeline.

“Red Oak represents a capital-efficient industry solution that will utilize existing assets and provide pull-through benefits to our systems,” Willie Chiang, CEO of Plains All American, said in the release. “We look forward to working closely with Phillips 66 and our committed shippers to bring Red Oak into service and further optimize 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.”


Two Companies Joining Forces to Build Crude Connector System in Midland Basin

Concho Resources Inc. and Frontier Midstream Solutions IV, LLC have announced to execute an agreement to create Beta Crude Connector, LLC (BCC), which will build and provide crude oil gathering, transportation and storage services in the Northern Midland Basin, supporting continued oil production growth in the region.

The new gathering and transportation system will consist of an approximately 100 mile gathering system, 250,000 barrel per day of crude oil storage facilities as well as truck terminals.

The pipeline system will have the initial capacity to deliver 150,000 bpd of crude oil to multiple delivery points, accessing local refineries and connecting to several downstream pipelines.

Construction will commence following an open season set for April 2019, targeting initial flows in mid-2019. Both companies own a 50% equity interest in BCC, with Frontier serving as operator.


Fate of Trans Alaska Pipeline Unclear as Oil Production Slows

As oil production in Alaska slows, state officials worry about the state of its 800-mile Trans Alaska Pipeline System that could possibly become unusable in the near future.

The 1977 pipeline now moves only about a quarter of the volume it once did at its peak. Slower movement means the oil loses heat along its journey through the line, causing ice crystals to form and damage pumping equipment. Heat loss also causes a waxy residue from carbon molecules to form and block up the line.

Although there has been recent discoveries of crude in Alaska, state oil production has been at a steady decline for the past several years. Explorers are also losing incentive to open new fields farther north as drilling is much cheaper in the lower 48 states.

"We need to see oil in that pipeline. That's our cash register. That's what generates revenue," said Governor Bill Walker in a telephone interview with the Houston Chronicle.

Crews are working to keep the oil moving through the line by adding heating units along the line and unburying parts of the line that are underground. The added measures are working so far, but it is costly.

The fate of the line is unclear as it may take years for new discoveries to ship significant quantities of oil, and that is only if it is seen as economically viable.

Fuel Fix

Sunoco Logistics Buys Permian Basin Pipeline System for $760 Million

Sunoco Logistics Partners LP announced Monday that it is purchasing a crude terminal and gathering system in the Permian Basin from Vitol Group for $760 million plus working capital as the company strategizes to expand its presence in the prolific oil basin.

Also included in the deal is Sunoco’s purchase of the 50-percent interest in SunVit Pipeline LLC.

Because the Permian Basin is one of the few areas where drilling is still profitable at current oil prices, Sunoco is taking advantage of the real estate and hopes to continue growing its crude platform in the basin.

Energy Transfer Partners LP and Energy Transfer Equity LP, owners of Sunoco Logistics Partners LP, support the acquisition, according to Michael Hennigan, President and CEO for Sunoco Logistics Partners LP.

“[Energy Transfer] shares our vision of the substantial growth opportunities from production in the Permian Basin… Long-term, with Energy Transfer’s growing crude gathering presence in West Texas combined with our extensive mainline crude platform and gathering assets, we expect growth opportunities for our partnerships in this very competitive region,” Hennigan said in a statement.

Sunoco Logistics

Kinder Morgan and Southern Company Announce Southern Natural Gas Pipeline Strategic Venture

Kinder Morgan and Southern Company announced Sunday its natural gas pipeline strategic venture designed to advance both companies’ leadership in energy infrastructure development by way of Southern Company’s acquisition of a 50 percent equity interest in the Southern Natural Gas (SNG) pipeline system, which will continue to be run by Kinder Morgan.

The SNG pipeline system runs for 7,600 miles, connecting natural gas supply basins in Texas, Louisiana, Mississippi, Alabama, and the Gulf of Mexico to markets in Louisiana, Mississippi, Alabama, Florida, Georgia, South Carolina, and Tennessee.

“This transaction is consistent with the infrastructure development strategy we have discussed for well over a year. The company’s strategic venture with Kinder Morgan, combined with our recent additions, AGL Resources and PowerSecure, underscore Southern Company’s leadership position in electricity and natural gas and our commitment to developing America’s energy infrastructure,” said Southern Company Chairman, President and CEO Thomas A. Fanning. “Our new ownership stake in SNG will position Southern Company for future growth opportunities and enhanced access to natural gas, which are expected to benefit customers and investors alike.”

Southern Company and Kinder Morgan, two largely known natural gas leaders in the nation, will work together to advance both companies’ efforts to develop infrastructure that is important to the nation’s energy future.

“Southern Company has been a valued customer of SNG for many years, and this agreement draws on the strengths of both companies,” said Norman G. Holmes, president of Kinder Morgan South Region Pipelines. “We are very pleased to deepen our relationship with them and excited about the growth opportunities this strategic relationship will provide.”

Kinder Morgan president and CEO, Steve Kean, also stated that the company plans to use the proceeds from the transaction to reduce debt at Kinder Morgan, which will push the company another step toward achieving its goal to strengthen its balance sheet and position the company for long-term value creation.

The companies expect to complete the transaction in the third or fourth quarter of this year.

Kinder Morgan