Cactus II pipeline capacity fully committed with long-term third-party shipper contracts
A Plains All American Pipeline, L.P. (PAA) subsidiary recently announced that its Cactus II pipeline, which extends from the Permian Basin to the Corpus Christi/Ingleside area, is fully committed with long-term third-party shipper contracts.
The pipeline has an initial capacity of 525,000 barrels per day. The contracts are composed of 425,000 barrels per day of long-term minimum volume commitments and 100,000 barrels per day of commitments associated with long-term acreage dedications. Approximately 60,000 barrels per day is reserved for walk-up shippers.
Affiliates of certain third-party contracted shippers have options exercisable no later than mid-2018 to participate as joint venture partners for up to 35 percent of Cactus II. PAA is expected to retain 65 percent ownership and will act as operator.
The Cactus II pipeline system will originate at Orla, Wink, Midland, Crane and McCamey, Texas. The first new pipeline will begin in Wink and go to McCamey, TX, and the second new pipeline, which is expected to be owned within the Joint Venture, will extend from McCamey to the Corpus Christi/Ingleside area.
The system will be capable of transporting multiple quality segregations. include a combination of capacity on existing pipelines and two new 26-inch pipelines. It is expandable to approximately 670,000 barrels per day through the addition of incremental pumping capacity.
The capital cost of the two new pipelines is projected to reach approximately $1.1 billion. PAA’s portion is expected to represent approximately $700 to $750 million, assuming exercise of the third party options to participate in the joint venture.
Permitting, right-of-way and procurement activities are underway. PAA expects the pipeline system to be operational in the third quarter of 2019.
