A Valero Energy Partners LP subsidiary acquired a 40% stake in a segment of the Red River crude oil pipeline from Plains All American Pipeline LP for about $70 million.
Valero Partners Wynnewood LLC's acquisition comprises the stake in the Hewitt segment, a new 138-mile, 16-inch pipeline with a capacity of 150,000 barrels per day, and a 40% interest in two 150,000-shell-barrel-capacity tanks at Hewitt station in Hewitt, Okla., where the pipeline segment ends, according to a Jan. 18 news release. The segment originates at a Plains Marketing LP terminal in Cushing, Okla.
The Red River pipeline started crude deliveries to Valero's refinery in Ardmore, Okla., in January, the partnership said in the release.
In relation to the deal, the Valero partnership also reached a 10-year throughput agreement with a Valero Energy Corp. subsidiary with a minimum volume commitment, a five-year renewal term and no direct commodity price exposure.
Plains All American will operate the Red River pipeline, but Valero will still hold a right to participate in expansions of the Hewitt segment. Valero funded the deal with cash on hand.