U.S. Regulators Partially OK Cactus II Rate Structure

NEW YORK (Reuters) - U.S. energy regulators have partially approved the rate structure and terms of service for Plains All American Pipeline LP’s Cactus II crude and condensate line from the Permian basin to the Corpus Christi, Texas, area.

While regulators approved most conditions put forth by Plains, they declined on Monday to approve a request for the option to hold another open season to solicit shipper commitments for up to 90 percent of the pipeline’s capacity on the expiration or early termination of service agreements.

“The Commission finds that Cactus II’s proposal is premature and not ripe for the Commission’s review,” the U.S. Federal Energy Regulatory Commission (FERC) said in a filing.

The 585,000 bpd Cactus II pipeline is one of several large pipeline projects scheduled to come online this year that connect the Permian basin, the largest oilfield in the United States, to the Gulf Coast. The Cactus II line is expected to begin service in the third quarter.

Production in the Permian basin surged beyond pipeline takeaway capacity last year, prompting a race by midstream companies for additional lines.

In April, FERC approved the rate structure and terms of service for EPIC Crude Pipeline LP’s 900,000-bpd line from the Permian to Corpus Christi, subject to some conditions.

The EPIC crude pipeline is expected to begin interim service from Crane, Texas, to Corpus Christi during the third quarter.

Phillips 66 Partners LP plans to bring the 900,000 bpd Gray Oak pipeline, from the Permian and Eagle Ford to the Gulf Coast, into service by the end of 2019.

Crude prices in the Midland region, considered the heart of the Permian basin, have strengthened in recent weeks on anticipation of those lines coming on.

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