The planned construction of the Diamond Pipeline extension to connect with the Capline Pipeline reversal is taking a pause as land seizure efforts are withdrawn amid political negotiations and accusations of environmental racism in Memphis, Tennessee.
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Pipeline owners Plains All American Pipeline and Valero Energy agreed to cease eminent domain lawsuits to access the remaining tracts of land needed near Memphis to connect the Diamond crude oil pipeline from Cushing, Oklahoma, to the Capline Pipeline, which is being reversed to carry crude oil to southern Louisiana.
As talks continue with landowners and the Memphis City Council, Plains executives said the start of the extension's construction is delayed and all alternatives are being considered. But for now, Plains maintaining its plans to complete the project by the end of this year said Chief Operating Officer Chris Chandler during Plains' earnings call.
"We've done that to take some time to evaluate some alternatives in response to our stakeholder engagement activities that we've been doing for almost two years now," Chandler said. "We're still planning on a start-up by year-end. But, if the alternatives cause that to change, we'll certainly provide an update when appropriate."
The extension pipeline, also called the Byhalia Connection, would stretch nearly 50 miles from west of Memphis to Byhalia, Mississippi, which is just southeast of Memphis. Critics complain the project goes near an aquifer used for drinking water and that it cuts through low-income, mostly Black neighborhoods, sparking charges of environmental racism, which Plains vehemently denies.
The Memphis City Council has been considering a proposed ordinance to make it harder to build the pipeline.
The goal of the projects is to connect the Diamond Pipeline, which also is being expanded by 200,000 b/d by the end of this year, and its origination from the Cushing crude oil hub to the Capline Pipeline. The delayed Capline Reversal project to move 1.2 million from Patoka, Illinois to St. James, Louisiana, is slated for a late 2021 completion and an early 2022 ramp-up in volumes.
Plains emphasized that the Capline project is independent of the Diamond extension and any potential delays. Capline is owned by Plains and MPLX.
The Capline reversal would help move more volumes from the Bakken Shale and other basins to refining and export hubs along the US Gulf Coast. Capline historically moved imported and offshore crude volumes from the Gulf Coast to Midwestern refiners.
Plains would not discuss details of the alternatives it is considering, but Plains CEO Willie Chiang was specifically asked about utilizing Valero's existing, but smaller, Collierville Pipeline that already connects to Capline. "I would tell you we're evaluating all options, and leave it at that," Chiang said, cutting off further discussion about the potential plans.