Phillips 66 and Plains All American Pipeline have united to form a limited liability company (LLC) for an oil pipeline in in the STACK area of Oklahoma.
As reported in Oil and Gas Investor, the Texan-based companies will equally split control over ownership and operation of the conduit that transports crude from northwestern Oklahoma to Cushing in that same state.
The companies plan to invest some US$15 million to expand the 55-mile STACK Pipeline by building a truck station some twelve miles north of the Cashion oil terminal. In addition, the project calls for constructing a lateral pipeline connecting the station to the Cashion terminal as well as 100,000 barrels of oil for storage.
Other expansion opportunities are reportedly being considered that would increase the capacity of the STACK Pipeline from the Cashion terminal.
As part of the joint venture, Plains contributed an existing oil terminal in Cashion, Oklahoma, containing about 200,000 barrels of crude oil in storage. The company also contributed the 55-mile STACK Pipeline with current capacity of about 100,000 barrels per day.
For its part, Phillips paid US$50 million in cash to plains in exchange for a 50 percent interest in the project.
The STACK play is an acronym for Sooner Trend (oil field), Anadarko (basin), and the counties of Canadian and Kingfisher. Last month we mentioned that the area has drawn increased attention to the exploration and production sector due to its low production costs and high yields. Producers such as Marathon Oil recently purchased 61,000 acres of STACK land from PayRock Energy Holdings for around US$888 million.
The joint venture comes as Plains on Tuesday reported that they missed its second quarter profit forecasts despite earning a net quarterly income of US$101 million. Nevertheless, company shares have risen by 15 percent so far in 2016 while total revenue in the second quarter surpassed analyst expectations to reach US$4.95 billion.
Phillips, meanwhile, has seen its stocks lose 5 percent of its value this year though some analysts believe the company will benefit from anticipated growth in the U.S. oil market.
By Erwin Cifuentes for Oilprice.com
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Erwin Cifuentes is a Contributing Editor for Southern Pulse Info where he focuses on politics, economics and security issues in Latin America and the Caribbean.… More