Plains All American Pipeline entered into definitive agreements to acquire a Permian Basin crude oil gathering system for $1.2 billion. The company also entered into definitive sales agreements totaling $380 million. The acquisition and pending sale transactions expected to close during the first half of 2017.
The crude oil gathering system is located in the northern portion of the Delaware Basin and supported by substantial acreage dedications from several producers active in this portion of the Delaware Basin.
“We expect aggregate crude oil production on the dedicated acreage to double over the next two to three years, and we believe that overall Permian Basin crude oil volumes have the potential to grow as much as 50% or more during this same time period,” said Greg Armstrong, Chairman and CEO of Plains All American. “Additionally, we expect to realize meaningful synergies with our existing assets and generate attractive investment returns relative to our cost of capital.”
Plains All American expects the system and planned enhancements to provide additional flexibility and a greater range of options for area producers, including connectivity to PAA’s pipelines with access to markets in Cushing, Houston and Corpus Christi. The company recently announced it was expanding the capacity on its Cactus pipeline from McCamey to Gardendale, TX to about 390,000 bpd in the third quarter of 2017.
Additionally, BridgeTex Pipeline Company, which is 50% owned by Plains All American said it was expanding the capacity on the BridgeTex pipeline from Colorado City to Houston, TX to about 400,000 bpd in the second quarter of 2017.