NEW YORK Feb 27 Swiss oil trader Vitol is
working with Sunoco Logistics Partners to expand
pipeline capacity for shipping booming Permian Basin crude
output to the Gulf Coast, growing its foothold in the West Texas
The two companies formed a 50-50 venture called SunVit
Pipelines in the third quarter last year to build a new crude
oil pipeline from the Permian oil storage hub in Midland to
Garden City, Texas, about 40 miles east, where it will connect
into Sunoco's Permian Express 2 line, it said in an SEC filing.
The venture had not previously been widely reported.
Sunoco also confirmed that it had successfully completed an
open season in the fourth quarter for the Permian Express 2,
which will carry some 200,000 barrels per day (bpd) from
multiple areas in the Permian some 300 miles to the coast.
Permian Express 2 is due to begin operating in the second
quarter of next year, Sunoco said. It said the SunVit line
should begin running next year, without providing a date.
No further details were available on the SunVit line.
Spokespeople for Sunoco and Vitol did not immediately reply to
requests for comment.
They are part of a flush of investment in new oil pipelines
and other infrastructure necessary to carry the unexpected boom
in shale and unconventional oil production from places like
North Dakota's Bakken and the Permian Basin.
The Permian may be a particularly attractive place to invest
for traders, since Midland is already an established storage
hub, though smaller than Cushing, Oklahoma, and pipelines offer
the flexibility of shipping northeast to Cushing or south to the
Gulf Coast refinery row.
For a list of other pipeline projects see:
Vitol's direct involvement also shows how privately owned
foreign trading companies like Trafigura and
Mercuria are racing to secure strategic assets in the U.S. oil
supply chain, hoping they can take advantage of the dramatic
volatility that has seized U.S. crude markets.
Through its co-owned master limited partnership firm
Blueknight Energy Partners, Vitol already has access to
substantial infrastructure in west Texas and Oklahoma.
Blueknight, which has 15 million barrels of crude and oil
product storage and 1,264 miles of pipeline, also operates and
maintains a Vitol crude oil terminal in Midland under a
five-year deal running until 2017, according to its SEC filings.
The filing provided no further details on the terminal.
In September, BlueKnight began running the 150,000 barrels
per day Pecos River crude oil pipeline that carries Permian
Basin crude to Magellan Midstream Partners' reversed
Longhorn pipeline moving oil Gulf Coast refineries. It is
considering extending the line, which it operates with a 30
percent ownership stake, into New Mexico.