Delek US Holdings Inc. is buying a 15% stake in the Wink-to-Webster pipeline that is designed to transport crude oil from the Permian Basin to the Gulf Coast beginning in the first half of 2021.
The refiner signed a definitive agreement with Wink to Webster Pipeline LLC, a joint venture that includes Exxon Mobil Corp., Lotus Midstream LLC and Plains All American Pipeline LP, to invest between $340 million and $380 million in the project. The pipeline would carry more than 1 million barrels of crude oil and condensate per day from points in Wink and Midland, Texas, to delivery points near Houston. The pipeline developers reached a final investment decision in January.
"This asset offers attractive return potential and it further integrates our portfolio by allowing us to offer additional services to producers in our gathering system," Delek CEO Ezra Uzi Yemin said in the company's Aug. 5 earnings release. The company expected a return on investment "well above our internal hurdle rate of 15% for discretionary logistics projects."
Delek joined the Wink-to-Webster pipeline after a competing project in which it was involved, the Permian to Gulf Coast pipeline, fell apart and left partners looking for other options. MPLX LP, which was also a partner in the scrapped pipeline, signed a letter of intent to join the Wink-to-Webster project as well and anticipates having a 15% stake.
The Wink-to-Webster developers on Aug. 5 also announced that Rattler Midstream LP had signed on to be a partner in the joint venture. Rattler is a limited partnership that Diamondback Energy Inc. formed specifically to own, operate, develop and acquire midstream infrastructure assets in the Permian Basin.