HOUSTON–(BUSINESS WIRE)–Plains All American Pipeline (NYSE: PAA) today announced a capital-efficient expansion and new joint venture of its existing Red River Pipeline system. Delek Logistics Partners, LP (NYSE: DKL) has purchased from a Plains’ subsidiary a 33% ownership interest in a new Red River Pipeline Company LLC joint venture for $128 million. Plains retained a 67% interest in the joint venture and will continue to operate the Red River system. In support of this expansion, Delek US (NYSE: DK) increased its long-term throughput and deficiency (“T&D”) agreement on the Red River system from an existing 35,000 barrels per day to 100,000 barrels per day. The expansion enables additional volume pull-through from Cushing and the Permian to the U.S. Gulf Coast markets, providing additional supply optionality for shippers.
“This is a win-win deal that fits our strategy of optimizing and expanding existing systems while exercising capital discipline,” stated Jeremy Goebel, Executive Vice President – Commercial, Plains All American. “This transaction expands long-term alignment with a natural shipper, supports and funds the expansion of the system, increases Plains’ net committed annual cash flow, and provides proceeds to fund our capital program or lower debt.”
The Red River pipeline system extends from Cushing, Oklahoma to Longview, Texas. The expansion will increase the total system capacity from approximately 150,000 barrels per day to approximately 235,000 barrels per day through the addition of pumping capacity and is expected to be completed during the first half of 2020. Approximately 30% of the expanded Red River system capacity from Cushing to Hewitt, Oklahoma is owned by a third party in an undivided joint interest structure.
About Plains All American Pipeline
Plains All American Pipeline, L.P. is a publicly traded master limited partnership that owns and operates midstream energy infrastructure and provides logistics services for crude oil, NGLs and natural gas. PAA owns an extensive network of pipeline transportation, terminalling, storage, and gathering assets in key crude oil and NGL producing basins and transportation corridors and at major market hubs in the United States and Canada. On average, PAA handles more than 6 million barrels per day of crude oil and NGL in its Transportation segment. PAA is headquartered in Houston, Texas. More information is available at www.plainsallamerican.com.