UPDATE 1-Sunoco sees first phase Permian Express operational in June

Thu May 9, 2013 10:14am EDT

* Permian Express Phase I coming; Phase II in development

* Nederland access part of other Texas crude line delayed

* Company proposes reversed, converted Eaglebine crude line

By Kristen Hays

HOUSTON, May 9 (Reuters) - Sunoco Logistics Partners LP expects the first phase of its West Texas-Nederland Permian Express crude oil pipeline to be operational at its initial 90,000 barrel per day capacity in June, Chief Executive Mike Hennigan told analysts on Thursday.

He said the second phase, which would carry an additional 200,000 bpd, is in the development and marketing phase, as output from the West Texas basin is expected to keep growing.

"My number is 200,000 barrels a day per year," Hennigan said of his Permian output growth projection. "If you believe that type of number, you need this type of project occurring every year to keep up with 200,000 barrels a year of growth."

Sunoco's storage hub in Nederland can hold 22 million barrels of crude.

Permian Basin output is booming as technological advances allow producers to tap oil in tight sands and shale plays such as the Eagle Ford in south Texas and North Dakota's Bakken. Sunoco's projects are among a number in the works to move that cheap U.S. crude to markets.

Hennigan, speaking during the company's first-quarter earnings conference call, said another major project, a 110,000 bpd West Texas-to-Nederland crude line, is coming online in phases.

The 40,000 bpd Houston access project started up, and a 30,000 bpd line to carry crude from West Texas to the Mid-Valley pipeline in Longview, Texas, will be operational by the end of May, he said.

However, a 40,000 bpd Nederland access part of that project is connected to Exxon Mobil Corp's Pegasus crude oil pipeline that was shut in March when it ruptured and spilled 5,000 barrels of heavy Canadian crude into an Arkansas housing subdivision. The startup of Sunoco's project has been delayed until the Pegasus line restarts, Hennigan said.

"We don't have information to share on the restart timing and we are awaiting information from Exxon Mobil," he said.

Sunoco also plans to reverse an underused refined products pipeline to move crude oil to Nederland and could launch an open season to gauge shipper interest as early as next week, Hennigan said. The reversed and converted line could be in service by mid-2014.

The Eaglebine Express originates in Hearne, Texas, about 200 miles northwest of Nederland. Hennigan said the Eagle Ford shale extends to the Woodbine play, hence the name.

"We view it as a sweet spot where the areas are meeting, so that is a nice fit for an area of crude production," he said.

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.