HOUSTON, Aug 4 (Reuters) - Exxon Mobil Corp has reversed part of an oil pipeline from northeastern Texas to northern Louisiana in the first step of a bigger plan to link Permian Basin output to Louisiana refineries.
Exxon last month reversed a 71-mile (114 km) segment of its North Line pipeline from Longview, Texas, to Shreveport and Finney in northern Louisiana, the company said on Tuesday.
That segment is helping feed about 15,000 barrels per day of Texas crude to Delek U.S. Holdings’ Arkansas refinery, displacing barrels that had been trucked or railed to the plant at higher transportation costs, Delek’s executive vice president, Mark Smith, told analysts on Tuesday during Delek’s quarterly earnings call.
Smith said Delek’s 80,000 barrel-per-day (bpd) El Dorado refinery is North Line’s sole shipper until Exxon finishes reversing another idle stretch “all the way down to Baton Rouge” where Exxon operates a 502,500 bpd refinery.
Delek moves barrels from Shreveport to the refinery via its Magnolia pipeline system.
The North Line pipeline is a 160,000 bpd system that had moved mostly Heavy Louisiana Sweet crude from the St. James, Louisiana crude hub northwest to Finney, then west to Longview.
In April 2012, 1,900 barrels of crude spilled from a 17-foot rupture in the line about 27 miles (43 km) west of Baton Rouge. Exxon shut the line, then restarted the portion that runs from St. James to the Baton Rouge refinery’s tank farm in Anchorage, Louisiana the next month.
The rest remained shut, leaving Delek’s Arkansas plant to increase trucking and start taking crude via rail to make up for lost North Line barrels.
But late last year Exxon teamed up with Sunoco Logistics Partners and SunVit Pipeline LLC, a joint venture of Sunoco and energy trader Vitol, to assemble a system to move Permian barrels to Louisiana via Longview.
The 100,000 bpd Permian Longview and Louisiana Extension, or PELA, project involves three parts. SunVit will build a pipeline to Garden City, Texas, from the Midland hub in West Texas, and Sunoco will construct the leg from Garden City to Longview.
Exxon’s part involves reversing North Line to move crude from Longview to Anchorage, though a spokesman declined to comment beyond the Longview-to-Shreveport segment. The companies have not disclosed the cost, but the entire project is slated to start up by mid-2016. (Reporting By Kristen Hays; Editing by Jonathan Oatis)