Sunoco Logistics unveils new pipeline project for West Texas crude
By ANGEL GONZALEZ
HOUSTON -- Sunoco Logistics on Thursday unveiled a new pipeline project to connect the burgeoning Permian oil basin in West Texas with refineries in the US Gulf coast.
The initial phase of the project would move 150,000 bpd of Permian oil into the Beaumont, Texas area, by reversing an existing pipeline and using excess capacity available in another line.
It could start operating within 6 to 9 months at an initial rate of 90,000 bpd, ramping up to its full capacity by mid-to-late 2013.
The project could be expanded by building new infrastructure to at least 350,000 bpd all the way to Louisiana by 2014, the company said.
The move is part of a wider scramble to bring an unexpected surge of crude oil production in the interior of the US to the Gulf coast, which contains the largest concentration of refineries in the country.
Most projects so far have focused on connecting the emerging Eagle Ford play in South Texas with the coast.
But the Permian, a mature oil region that has been revitalized by hydraulic fracturing technology, has recently seen a major wave of pipeline proposals, which could help ease a glut of West Texas Intermediate crude piling up in storage at Cushing, Oklahoma.
"Bottlenecks will be alleviated," said analysts with Tudor, Pickering & Holt.
Sunoco Logistics said it expects to launch an open season for producers to reserve space in the pipeline within a week.
Prompted by new technology and relatively high oil prices, US average quarterly oil production has topped 6 million bpd for the first time since 1998, according to the US Energy Information Administration.
Dow Jones Newswires
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