Plains All American Pipeline LP already had plans to build a 24-inch pipeline loop with about 300,000 barrels per day (bbl/d) of takeaway capacity from the Permian’s Delaware Basin. Double that number and you’ll be closer to the daily capacity Plains now plans to move out of the Delaware by mid-2016.

The substantial increase is due to a recent announcement from Plains that that it would build two new Delaware Basin pipelines, the Avalon Extension and State Line pipelines, and related gathering systems, as well as a 20-inch loop line from its existing Blacktip station to Wink, Texas. The company also plans to expand the Blacktip station.

The 12-inch-diameter, 32-mile Avalon Extension Pipeline will extend the existing Avalon Pipeline into Culberson County, Texas, from Loving County, Texas. The expansion is expected to enter service in July with system completion in September. The 16-inch-diameter, 60-mile State Line Pipeline from Culberson County to Wink will have a transportation capacity of up to 150,000 bbl/d of crude oil and condensate. State Line is expected to enter service in phases beginning in early 2016 and concluding midyear.

The Blacktip station expansion and pipeline loop will add 200,000 bbl of new operational tankage and associated pumping to provide another 200,000 bbl/d of pipeline capacity from the Blacktip station to Wink. Completion of the projects is expected in August.

According to Al Swanson, Plains’ executive vice president and CFO, building now is a strategic move, as recently reduced rig counts are leading the market toward a self-correction and increasing demand.

“Ultimately, depending on the degree of the length of this duration [of low oil prices], there still is a need for infrastructure,” he said at the recent Credit Suisse Energy Summit. “We see good solid demand for that over the next several years, albeit potentially at lower levels than what 2014 peaked at.”

Caryn Livingston can be reached at clivingston@hartenergy.com or 713-260-6433.

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