trending Market Intelligence /marketintelligence/en/news-insights/trending/y_ht84lmlh0dm_qftpfwwg2 content esgSubNav
In This List

Plains wants more than just money from oil pipeline partner

Podcast

Next in Tech | Episode 49: Carbon reduction in cloud

Blog

Using ESG Analysis to Support a Sustainable Future

Research

US utility commissioners: Who they are and how they impact regulation

Blog

Q&A: Datacenters: Energy Hogs or Sustainability Helpers?


Plains wants more than just money from oil pipeline partner

Plains All American Pipeline LP plans to develop its proposed 585,000-barrel-per-day pipeline from the Permian Basin to Corpus Christi, Texas, as a joint venture, executives said.

"Our capital program reflects the expectation that Cactus II will be owned in a joint venture structure, with the proportionate share of the project cost dispersed among the partners and the project to span an approximate 18-months time-frame," CFO Al Swanson noted during Plains' Feb. 7 fourth-quarter earnings call.

Cactus II, which Plains decided to construct after receiving sufficient interest during the project's initial open season, will link existing pipelines with new pipelines between Wink and McCamey in Texas, and from McCamey to the Corpus Christi area. Plains will also hold a second binding open season for crude oil transportation at the Orla, Wink, Midland, Crane and McCamey points.

Declining to go too far in describing the search for a joint venture partner, CEO Greg Armstrong did acknowledge that the Plains wants more than just a cash supply.

"We would not have problems getting partners in this project at all if you're just looking for a financial partner," he said. "[We are] looking for people that bring more than just money to the table."

The partnership on Feb. 6 reported fourth-quarter adjusted EBITDA of $631 million, up from $600 million in the year-ago period. Plains' distributable cash flow was $419 million, an increase from $267 million in the fourth quarter of 2016.

Plains' general partner recorded a deferred income tax expense of $823 million in the fourth quarter of 2017, following the corporate tax rate's recent reduction to 21% from 35%, which according to the earnings release "does not affect the timing of when [the general partner] is expected to pay taxes, which we do not currently expect to occur within the next 10 years."

For all of 2017, Plains reported $2.08 billion of adjusted EBITDA, a decrease from $2.17 billion in 2016. The partnership's distributable cash flow for the full year was $1.31 billion, up from $849 million in 2016.

COO Willie Chiang said during the conference call that Plains closed asset sales totaling $1.1 billion in 2017. He reiterated that it plans to sell an additional $700 million in 2018.