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ExxonMobil, Plains All American Pipeline, and Lotus Midstream will build a pipeline capable of transporting more than 1 million barrels per day of crude oil and condensate from the Permian in West Texas to the Texas Gulf Coast, the companies said on Wednesday.
Exxon, Plains All American, and Lotus Midstream decided to proceed with plans to build the Wink to Webster pipeline system, with origin points at Wink and Midland to multiple locations near Houston, including Webster and Baytown, and with connectivity to Texas City and Beaumont.
The companies have formed a joint venture, Wink to Webster Pipeline LLC, and have already ordered 650 miles of domestically sourced 36-inch-diameter line pipe.
The project is the result of a “significant volume of long-term commitments” and is targeted to start operations in the first half of 2021, Plains All American said.
The Wink to Webster Pipeline will be aimed at providing pipeline transportation to ExxonMobil and other Permian producers to market destinations in Texas, as U.S. shale drillers look to have more takeaway capacity from West Texas to the Gulf Coast for the continuously growing production in the most prolific U.S. crude oil basin.
As per the EIA’s latest Drilling Productivity Report from last week, the Permian’s production is expected to average 3.831 million bpd in January and to rise by 23,000 bpd to 3.854 million bpd in February.
For Exxon, the pipeline project adds to the announcement from earlier this week that the U.S. supermajor reached a final investment decision to build a new crude unit at its Beaumont, Texas refinery that will increase crude refining capacity by more than 65 percent, or 250,000 barrels per day.
Last year, Exxon laid out plans to triple its production in the Permian to more than 600,000 oil-equivalent barrels by 2025 and to invest more than US$2 billion in transportation infrastructure to support its Permian operations.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.