Plains' Cactus II Oil Pipeline to Begin Line Fill in a Week, According to Source

NEW YORK (Reuters) - Plains All American Pipeline LP’s 670,000 bpd Cactus II oil pipeline system from the Permian Basin to the Corpus Christi, Texas area will commence line fill within a week, a source with direct knowledge of the matter said.

Cactus II construction pipeyard. (photo: Plains All American)

The pipeline operator said this month the Cactus II project is progressing on schedule for initial service by the end of the third quarter of 2019.

“We have over 90% of the pipe in the ground and we’re working diligently toward completion,” a company executive said during its investor day about two weeks ago.

Once line fill is complete, commodities merchant Trafigura, one of the largest shippers on the line, will be shipping full contractual volumes, the source said.

Trafigura signed a long-term agreement with Plains last year to transport a total of 300,000 bpd of crude and condensate on the Cactus II pipeline from the Permian Basin to the port of Corpus Christi.

The trading house is one of the biggest exporters of U.S. crude and the deal with Plains will allow it deliver crude to U.S. Gulf Coast refiners, ship the oil to its condensate splitters and export terminal in Corpus Christi, which it co-owns with Buckeye Partners L.P (BPL.N).

Pipeline takeaway constraints had slowed production growth and weighed on oil prices in the Permian basin but midstream companies have announced several new projects, such as Cactus II, to help clear the transportation bottleneck.

Exports of U.S. crude have surged to a record at nearly 4 million bpd after Washington lifted a ban in late 2015.

Other shippers on the Cactus II line include Concho Resources Inc and Anadarko Petroleum Corp, according to the companies.

Two other pipelines are also on track to begin service this year to transport Permian crude to the Gulf Coast.

“With the impending start-ups of Cactus II, EPIC, and Gray Oak, there will be about 2 million bpd of crude capacity delivering into Corpus Christi from the Permian, with the majority, if not all, of the incremental supply destined for international markets via the docks,” Barclays analysts said in a note.

Plains did not immediately respond to requests for comment.

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