* Blueknight to operate pipeline from Pecos to Crane, TX
* Line will allow more shipping of W Texas oil to coast
* To connect with Magellan-operated Longhorn toward Houston
* Blueknight to take 30 pct ownership stake in pipeline
Feb 4, NEW YORK Blueknight Energy Partners LP
, a midstream oil company controlled by global oil
trader Vitol SA, will operate a new 150,000 barrel-per-day oil
pipeline in West Texas to send more local crude toward the Gulf
Coast, the company said on Monday.
Blueknight will buy a 30 percent stake in the Pecos River
Pipeline, a 70-mile (110-km) line connecting Pecos to Crane,
Texas, the company said. There, it can feed into a larger
pipeline - Magellan's Longhorn - toward the Houston area
and the U.S. refining hub along the Gulf Coast.
Blueknight said it signed a deal with Advantage Pipeline
LLC, another midstream oil company and shareholder in the line.
The new Pecos line should begin operating in May and Blueknight
will run it, the firm said.
Financial terms of the deal were not released.
The 16-inch diameter pipeline will "open new markets for
crude oil producers in this part of the growing Permian Basin,"
Blueknight Chief Executive Mark Hurley said in a statement.
Crane is near the oil-rich Midland area in West Texas, where
production from shale oil plays has been surging.
By delivering crude to Longhorn, a former fuel pipeline
that is being reversed to carry crude to the Gulf Coast, the
Pecos River line could send more West Texas crude toward Houston
instead of landlocked Cushing, Oklahoma, a delivery hub where
oil can be discounted by more than $20 a barrel because of a
Longhorn, in its new configuration from Crane to Houston, is
scheduled to begin pumping crude later this quarter or early in
the second quarter. It will at first pump 75,000 bpd and ramp up
to 225,000 bpd in the middle of this year, Magellan said last
Blueknight has in recent years expanded its foothold in U.S.
energy markets with storage and energy transportation assets,
including around 1,300 miles of pipeline. Blueknight also owns a
combined 15 million barrels of crude and oil product storage
facilities across 22 different states.