Plains All American Pipeline has announced an expansion and new joint venture of its existing Red River Pipeline system.
Delek Logistics Partners has bought a 33% ownership interest from a Plains subsidiary in a new Red River Pipeline Company joint venture for $128 million. Plains retained a 67% interest in the joint venture and will continue to operate the Red River system.
Delek US has increased its long-term throughput and deficiency agreement on the Red River system from an existing 35,000 barrels per day to 100,000 barrels per day. The expansion enables additional volume pull-through from Cushing and the Permian to the US Gulf Coast markets, providing additional supply optionality for shippers.
Jeremy Goebel, executive vice president – commercial, Plains All American, says: 'This is a win-win deal that fits our strategic of optimising and expanding existing systems while exercising capital discipline.
'This transaction expands long-term alignment with a natural shippers, supports and funds the expansion of the system, increases Plains' net committed annual cash flow, and provides proceeds to fund our capital programme or lower debt.'
The expansion will increase the total system capacity from 150,000 barrels per day to 235,000 barrels per day through the addition of pumping capacity and is expected to be completed during the first half of 2020.
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