Velocity Central Oklahoma Pipeline LLC, a wholly owned subsidiary of Velocity Midstream, has entered into definitive agreements with a subsidiary of CVR Refining, LP related to Velocity’s construction of a crude oil pipeline and terminal directly linking the fairway of the South Central Oklahoma Oil Province (SCOOP) to CVR Refining’s Wynnewood, Oklahoma, refinery.
CVR Refining will hold a 40 percent stake in the newly formed joint venture, Velocity Pipeline Partners, LLC , and it will contract with VPP for transportation services. Velocity will act as manager of the joint venture and operate the pipelines following the completion of the pipeline’s construction.
In addition to the Wynnewood refinery, which has a rated capacity of 70,000 barrels per calendar day (bpcd), CVR Refining also owns and operates a crude oil refinery in Coffeyville, Kansas, with a rated capacity of 115,000 bpcd. The Wynnewood refinery is located in close proximity to the SCOOP play and the Cushing hub. Velocity’s new crude oil project provides the Wynnewood refinery with direct pipeline access to SCOOP production. The new pipeline also enables producers in the SCOOP to segregate their heavier crude barrels, produced from the Springer and Woodford oil formations, from their lighter barrels, produced from the Woodford condensate formation.
Velocity also expects to commence a subsequent crude oil pipeline project looping the majority of Velocity’s existing pipeline. The loop will provide producers crude oil segregation along the entire SCOOP fairway, further reducing crude trucking costs. This forthcoming project will allow Velocity to leverage its existing footprint, multi-line rights of way and construction and operations teams to quickly and cost-effectively construct the second pipeline and expanded terminal facilities. In addition to the construction of crude transportation pipelines and terminals, Velocity will continue to build out gathering laterals and injection stations to better serve SCOOP producers.
Once completed, the addition of Velocity’s VPP pipeline and crude oil loop will allow producers to gather and transport crude oil and condensate from points in Grady, Stephens, Garvin, McClain and Carter counties to both the Wynnewood refinery and the Cushing Hub, where CVR Refining maintains significant market outlets, crude storage and pipeline access to its Coffeyville refinery. CVR Refining also owns and operates significant crude oil logistics assets throughout the SCOOP play. The construction of this new crude pipeline allows the company to further optimize those logistical resources. Additionally, the pipeline will add flow assurance in inclement weather as well as reduce traffic and provide other benefits to producers.