By SAABIRA CHAUDHURI
Plains All American Pipeline said it is constructing a new 310-mile, 20-inch crude-oil pipeline from McCamey, Texas, to Gardendale, Texas.
The pipeline, called the Cactus pipeline, is expected to be placed into service in the first quarter of 2015.
Plains said it has entered into a letter of intent with a third party regarding a long-term commitment for a majority of the pipeline's capacity and is in discussions with several potential shippers for the remaining capacity.
Total project investment is expected to range from $350 million to $375 million.
It said the pipeline is expected to transport both sweet and sour crude oil from the Permian Basin to the Eagle Ford pipeline it operates as part of a joint venture with Enterprise Products. The Eagle Ford pipeline serves markets in Three Rivers, Texas, and Corpus Christi, Texas, and can supply the Houston-area market through a connection to Enterprise Products' south Texas crude-oil pipeline.
Plains noted that crude oil delivered through the Cactus pipeline will have access to rail-loading capacity at the Gardendale, Texas, station operated by PAA Natural Gas Storage and access to the Eagle Ford barge-dock facility in the Corpus Christi area.
Plains holds a 48% stake in PAA, the company's gas-storage spinoff.
Plains added that the Cactus pipeline will initially be designed to have a capacity of about 200,000 bpd, which can be increased as demand warrants.
In February, Magellan Midstream agreed to buy Plains' noncore refined-product pipelines and related assets in the Rocky Mountain and New Mexico areas for about $190 million.
Plains has experienced strong demand as it benefits from a huge boost in the US supply of onshore oil and natural gas. While many producers have suffered from lower natural-gas prices caused by a glut in the market, pipeline companies still profit from moving increasingly large quantities of the commodity.
Dow Jones Newswires