Enterprise Products Partners and Energy Transfer Partners
have agreed to form a 50/50 joint venture to design and
construct a crude oil pipeline from Cushing, Oklahoma to
Houston. The project would allow greater access
to US Gulf-area refining complexes and add
approximately 500,000 barrels of storage capacity at new facilities to be constructed and
owned by the joint venture at Enterprises new Houston
crude oil terminal.
Financial details were not disclosed.
The pipeline would provide an outlet for more than 400,000
bpd of crude oil supplies which are currently stranded at the
Cushing hub and priced at a substantial discount to imported
crude oil on the Gulf coast. The pipeline would also give
refiners on the Gulf coast improved access to growing supplies
of domestic crude oil production and an alternative to higher
priced crude oil imports, which represent their largest source
Utilizing new and existing pipelines, the 584-mile project would originate at
Enterprises 3.1 mn barrel crude oil storage facility in
Cushing. Enterprise and Energy Transfer would each contribute
existing assets to the joint venture, including Energy
Transfers 240-mile, 24-inch diameter natural
gas pipeline in East Texas, which would comprise
approximately 40% of the proposed system.
By utilizing infrastructure already in place and following
existing pipeline right-of-ways for the 354 miles of new construction, the joint venture
partners expect the pipeline to be in service much sooner than
laying new pipe only.
The terminus of the pipeline would be at Enterprises
ECHO crude oil storage and terminal facility in southeast
Harris County, Texas. The ECHO crude oil terminal would offer
access to major Texas Gulf coast refining centers in Texas City,
Pasadena/Deer Park, Baytown and on the Houston Ship Channel,
the companies said.
Subject to sufficient commitments from shippers and the
required regulatory approvals, the new pipeline is expected to
begin service in the fourth quarter of 2012. The joint venture
partners would share commercial responsibilities, with an
integrated project team responsible for construction of the pipeline and
Enterprise serving as operator.
We are very pleased to partner with Energy Transfer on
this project which has received a very positive response during
initial meetings with potential shippers, said Michael A.
Creel, president and chief executive officer of
Enterprises general partner. Within the next 60
days, we expect to have firm, long-term commitments in place
for the available capacity.
We are pleased to work with Enterprise on this crude
oil pipeline project, said Kelcy L. Warren,
chairman and chief executive officer of Energy Transfer.
We believe our joint venture will be cost-competitive and
offer the most expedient solution to benefit domestic crude oil
producers and Gulf coast consumers who are dependent on
higher-priced foreign crude oil as a result of the lack of
pipeline infrastructure between Cushing and the Gulf coast. We
are also excited by this opportunity, which marks our entry
into the fee-based crude oil pipeline and terminalling
business, further diversifying Energy Transfers business
US Midcontinent crude oil supplies have been growing rapidly
and are expected to continue to grow with the development of
shale plays such as Bone Springs/Avalon, Bakken and Barnett, as
well as increasing Canadian crude oil production, the companies
These supplies are accumulating in Cushing, which lacks
southbound pipeline capacity to the largest US crude oil market
on the Gulf coast with more than 2 mn bpd of refining capacity. The glut of crude
oil supplies in Cushing has resulted in Cushing barrels trading
at a substantial discount to the price of crude oil on the Gulf
coast, most of which is crude oil imported by ship from foreign
crude oil producers.
Over the past three months, Cushing crude oil (West Texas
Intermediate) has been trading at an average discount of
approximately $12.57 per barrel and $10.54 per barrel to
Louisiana Light Sweet and Brent crude oil, respectively.