May 7, 2013 / 5:31 PM / 5 years ago

UPDATE 1-Plains' Cactus pipeline to ship Texas sweet and sour crude

HOUSTON, May 7 (Reuters) - Plains All American Pipeline LP’s proposed Cactus pipeline would move both sweet and sour crude from the Permian Basin in West Texas to the Corpus Christi and Three Rivers markets in South Texas, Chief Executive Greg Armstrong told analysts on Tuesday.

Sour crude shipped through the 310-mile (499 km), 200,000 barrel per day pipeline would displace foreign import barrels of the heavier, more sour crudes that normally come into the U.S. Gulf Coast through Corpus Christi, he said.

“You are trying to get the right crude to the right markets,” Armstrong said during the company’s first-quarter earnings conference call.

The pipeline, expected to cost $350 million to $375 million, would have an initial capacity of 200,000 barrels per day and could be expanded if necessary. It is slated to start up in the first quarter of 2015.

After being asked if Plains had any plans to add a condensate splitter to its assets, Armstrong said the company saw its announced pipeline projects as moves that “make the most sense” to handle growing crude and condensate output from the Eagle Ford shale play in Texas.

But Harry Pefanis, president and chief operating officer, said he expected to see more condensate splitting capacity come online.

Increasing condensate output along with crude has prompted some companies to build or alter operations that can process it. The very light hydrocarbons can be sold as crude oil, a diluent to blend with heavy crude as needed in Canada, or they can be processed in a condensate splitter and sold.

Last month, Kinder Morgan Energy Partners said it may further expand an already expanded splitter at its terminal along the Houston Ship Channel as condensate volumes have increased at its 300,000 bpd crude/condensate pipeline originating in Eagle Ford.

Armstrong said condensate was a dynamic market “and we will see changes that will ripple across the industry a little bit as we push out the last of the light-sweet crude imports, including any condensate, that comes into the Gulf Coast.”

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