* Plains line could boost supply to Cushing by 175,000 bpd
* Plains signs deal with SandRidge Energy to transport crude
* New line to serve Mississippian Lime shale oil play in OK.
NEW YORK, Feb 7 (Reuters) - Plains All American will build a new crude oil pipeline from a booming U.S. shale oil play to the largest U.S. oil hub at Cushing, Oklahoma, the company said on Tuesday, potentially boosting Cushing deliveries by 175,000 barrels per day (bpd).
The new line is expected to start up in mid-2013, Houston-based Plains said. It will transport crude pumped by producer SandRidge Energy, a major acreage holder in the up-and-coming Mississippian Lime shale play, which spans Oklahoma and Southern Kansas.
The pipeline is a huge expansion of a project Plains first announced last December, known as the Medford-to-Cushing line. Altogether, the new pipeline system will run 170 miles from near Alva, Oklahoma to Cushing, the delivery point for the NYMEX benchmark WTI crude contract.
Plains earlier plans had called for a modest flow of up to 25,000 bpd into Cushing, while the planned expansion could boost Cushing-bound capacity by seven times that volume.
The Plains announcement comes at a time when many oil producers in the U.S. Midcontinent have been seeking to ship oil away from Cushing and toward regions, such as the U.S. Gulf Coast, where crude commands a hefty premium to Cushing prices.
Light crude in the Gulf Coast has been trading around $10 a barrel higher than at Cushing, where outbound pipeline capacity it limited.
Enterprise Product Partners is working to reverse the 150,000 bpd Houston-to-Cushing Seaway pipeline by the middle of 2012, to siphon more crude away from big crude hub.
A glut of crude in the Midwest, largely due to increasing Canadian crude imports and growing shale oil production in North Dakota and other shale plays, has driven regional price disparities. Cushing tanks have been holding around 30 million barrels of crude, according to Department of Energy data.
In December, SandRidge announced it entered a $1 billion joint venture with Spanish oil major Repsol YPF to develop acreage it holds in the Mississippian play in Western Kansas. At the time, SandRidge said it had already drilled more than 195 wells in the play.
Plains said it could extend the new pipeline project northward from Oklahoma into Kansas if demand warrants further construction.