Plains All American Pipeline and Holly Energy Partners have created a joint venture company Cushing Connect Pipeline & Terminal to develop a new crude oil pipeline and operate a Cushing storage terminal.
The 50/50 joint venture has been created to build a new 160,000 barrel per day common carrier crude oil pipeline that will connect the Cushing, Oklahoma crude oil hub to the Tulsa, Oklahoma refining complex owned by a subsidiary of HollyFrontier. It will also build and operate a 1.5-million-barrel crude oil storage terminal in Cushing, Oklahoma.
The terminal is expected to be in service during the second quarter of 2020, and the pipeline is expected to be in service during the first quarter of 2021. Long-term commercial agreements have been entered into to support the joint venture assets.
The JV will contract with an affiliate of Holly Energy to manage the construction and operation of the pipeline and with an affiliate of Plains to manage the operation of the JV terminal. The total joint venture investment will be shared proportionately among the partners and is estimated to total $130 million, including the existing JV terminal contributed by Plains valued at $40 million.
George Damiris, CEO of the general partner of Holly Energy, says: ‘The new joint venture will provide growth to Holly Energy by insourcing logistics spend and provide the capability to supply 100% of HFC’s Tulsa refinery crude throughput. Our partnership with Plains generated Holly Energy growth while providing HFC long-term control of a strategic asset.
Plains All American executive vice president – commercial Jeremy Goebel adds: ‘This win-win joint venture aligns with our strategy of optimising existing assets to provide value-chain solutions for long-term industry partners in a capital efficient manner.
‘This investment expands our relationship with a key operational hub service customer and provides additional long-term alignment on movements to the Tulsa refinery.’