ExxonMobil and Plains All American Pipeline, L.P. have signed a letter of intent to pursue the creation of a joint venture to construct a pipeline to transport crude oil and condensate from multiple locations in the Permian basin to the Texas Gulf Coast in the United States.
The proposed common carrier pipeline would be designed to ship more than one million barrels of crude oil and condensate per day, providing a safe, efficient and cost-effective option to transport ExxonMobil and other third-party production to market destinations in Texas.
The pipeline would originate in both Wink and Midland, Texas with delivery points in Webster, Baytown and Beaumont, Texas. A priority would be placed on using existing pipeline corridors to help limit potential community and environmental disruptions.
Plains All American Pipeline, L.P., headquartered in Houston, Texas, U.S.A., is a publicly traded master limited partnership that owns and operates midstream energy infrastructure and provides logistics services for crude oil, natural gas liquids (NGLs) and natural gas. PAA owns an extensive network of pipeline transportation, terminaling, storage, and gathering assets in key crude oil and NGL producing basins and transportation corridors and at major market hubs in the United States and Canada. On average, PAA handles more than 5 million barrels per day of crude oil and NGL in its transportation segment.
ExxonMobil, the largest publicly traded international oil and gas company, holds an industry-leading inventory of resources, is one of the largest refiners and marketers of petroleum products, and its chemical company is one of the largest in the world.
A start-up date for the project was not mentioned, but at the earliest, the pipeline is projected to come onstream by late 2020-2021.
Several newbuild pipelines or expansions of existing lines to take Permian crude production out of the basin will begin service in the second half of 2019. The project appears to be the first proposal to add large-scale takeaway capacity after mid-2020 out of the West Texas-New Mexico basin, where production is expanding rapidly and starting to outpace the ability to ship it.
The Permian began 2018 producing about three million barrels per day (bpd) of crude and is now up to 3.647 million bpd, according to S&P Global Platts Analytics.
Earlier this year, ExxonMobil announced plans to triple daily production from its operations in the basin to more than 600,000 bpd of oil equivalent by 2025 and quintuple in that same time frame its unconventional oil output from the Permian’s prolific Delaware and Midland sub-basins.