Delek Logistics Joint Ventures Building Two Texas Pipelines
Delek Logistics Partners, through wholly owned subsidiaries, has entered into two joint ventures that will construct pipelines in Texas to serve third parties and subsidiaries of Delek US Holdings Inc.
Delek Logistics’ total projected investment for the two joint ventures is approximately $91.0 million and will be financed through a combination of cash from operations and borrowings under its revolving credit facility.
One joint venture is a 50/50 partnership with Plains All American Pipeline to build the Caddo Pipeline, an 80-mile, 12-in. pipeline between Longview, Texas, and Shreveport, La. The Caddo Pipeline will originate at the Plains Atlas Terminal in Longview and will have the capacity to move up to 80,000 barrels of domestic crude oil per day to supply refineries in the Shreveport area and Delek Logistics’ pipeline system supplying Delek US Holdings’ El Dorado, Arkansas refinery.
Under the agreement, Plains All American will construct and operate the Caddo Pipeline. The total project investment is expected to be approximately $100 million; the pipeline is supported by long-term shipper commitments and is expected to be completed in mid-2016.
“These joint ventures mark our first development projects and should create additional growth for the partnership. In addition, these crude oil pipelines will improve our ability to serve Delek US, which will participate as a shipper in both projects, as well as, increasing our ability to provide logistics services to third parties,” said Uzi Yemin, chairman and CEO of Delek Logistics’ general partner. “We look forward to working with our partners toward successful completion and operation of these joint ventures.”
The second joint veture is a 33 percent partnership with Rangeland Energy for the RIO Pipeline — Delaware Basin to Midland Pipeline Project. This project has an estimated construction cost of approximately $125 million, and consists of a 12-in., 107-mile pipeline originating in north Loving County, Texas near the Texas-New Mexico border and terminating in Midland, Texas.
This pipeline will have a capacity of 55,000 barrels per day, with the capability to expand to 85,000 barrels per day or more with additional capital investments. Also included in this project are terminals at each end of the pipeline, injection points and storage tanks to support this pipeline. Upon successful completion of this project Delek US expects to be an anchor shipper.
Through connections in Midland, Texas, this project will deliver crude to take-away pipelines located in the Midland area. This project is expected to be completed in the first half of 2016. Rangeland will build and operate these assets on behalf of the joint venture.Delek Logistics, Plains All American, Plains All American Pipeline, Rangeland Energy