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ExxonMobil, Plains, Lotus to proceed with 1 million b/d Permian crude pipe to feed Beaumont expansion

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ExxonMobil, Plains, Lotus to proceed with 1 million b/d Permian crude pipe to feed Beaumont expansion

New York — A 1 million b/d crude pipeline that would transport Permian Basin crude to the US Gulf Coast received the formal go-ahead from its backers and is expected online in the first half of 2021, according to a statement released Wednesday by partners ExxonMobil, Plains All American and Lotus Midstream.

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"The new common-carrier pipeline system will provide more than 1 million b/d of crude oil and condensate capacity and will be constructed from the Permian Basin in West Texas to the Texas Gulf Coast," they said.

Plains, ExxonMobil and Lotus Midstream formed the Wink to Webster Pipeline LLC Joint Venture and have already ordered nearly 650 miles of domestically sourced 36-inch-diameter line pipe. Plains will be the operator of the line during the construction phase.

The pipeline announcement was expected after ExxonMobil on Tuesday confirmed it was beginning construction at its 365,644 b/d Beaumont, Texas, refinery of a 250,000 b/d crude unit to run the light, sweet oil produced from its holdings in the Permian Basin, which would provide shipping commitments substantial enough to make the pipeline commercially viable.

The pipeline will have origin points at Wink and Midland, Texas, and multiple destination points in the Houston area including Webster and Baytown, where ExxonMobil is currently expanding light sweet crude processing capacity at the 560,500 b/d refinery by about 60,000 b/d.

Pipeline connectivity will also be provided to Texas City and Beaumont, the project's backers said.

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ExxonMobil's Beaumont crude unit expansion is expected to be completed by 2022.

ExxonMobil in 2018 announced its "Growing the Gulf" initiative, which would expand the processing capacity of its three large US Gulf Coast refineries -- Baytown, Beaumont, and Baton Rouge -- of growing light, sweet crude production from its Permian Basin holdings.

At that time, ExxonMobil said it expected to triple its Permian production to more than 600,000 b/d. Crude processing capacity is expected to increase by 17,000 b/d at the 502,500 b/d Baton Rouge refinery.

The pipeline announcement did not divulge if the project would be combined with a similar project, the Permian Gulf Coast pipeline.

PGC was proposed by Energy Transfer Partners, Magellan, Delek and MPLX, Marathon Petroleum's sponsored midstream MLP.

Marathon executives previously discussed the possibility of combining the projects.

-- Janet McGurty,

-- Edited by Keiron Greenhalgh,