Phillips 66 Partners LP (NYSE: PSXP) and Paradigm Energy Partners LLC have executed agreements to form two joint ventures to develop midstream logistics infrastructure in North Dakota. Consisting of two previously announced projects, the Sacagawea Pipeline and Palermo Rail Terminal, the joint ventures are designed to enhance logistical options for crude oil transportation in the Bakken region.
The pipeline JV will own an 88% ownership interest in Sacagawea Pipeline LLC, with the remaining 12% interest to be owned by Grey Wolf Midstream LLC. Additionally, the pipeline JV will own and construct a crude oil storage terminal and central delivery point (CDP) for various crude gathering systems located in Keene, N.D. The Sacagawea Pipeline project is a 76-mile pipeline being developed to deliver crude oil from various points in and around Johnson's Corner and the Paradigm CDP, located in McKenzie County, to destinations with take away options for both rail and pipeline in Palermo and Stanley, located in Mountrail County. In October, Paradigm extended an open season for the pipeline, which is expected to close on Dec. 15.
Under the terms of the pipeline JV agreement, Phillips 66 Partners and Paradigm will each own a 50%interest in the joint venture and will fund their proportionate share of the construction costs. Paradigm will construct the pipeline and Phillips 66 Partners will be the operator.
The rail JV will own the Palermo Rail Terminal. Located on a 710-acre site in Palermo, the crude oil rail-loading facility is designed to have an initial capacity of 100,000 barrels per day, with the flexibility to be expanded to 200,000 barrels per day. The terminal will have direct access to the Sacagawea Pipeline and provide East and West Coast rail access for third-party shippers through the BNSF railway.
Under the terms of the rail JV Agreement, Phillips 66 Partners will own between a 50- to 70% interest with Paradigm’s ownership percentage subject to the achievement of certain milestones associated with the Pipeline JV. Final ownership interests will be determined prior to closing, and each party will fund their proportionate share of the construction costs. Phillips 66 Partners will construct and operate the rail terminal.
The transactions are expected to close in the fourth quarter of 2014 with total capital cost for the joint ventures estimated to be approximately $300 million, subject to the terms set forth in the final agreements. Both the pipeline and rail terminal are expected to commence commercial operations in the first quarter of 2016.
Recommended Reading
Nabors, Corva Expand Alliance to Boost AI-Driven Innovation at Rig Sites
2025-04-13 - Nabors Drilling Technologies and Corva AI will use the RigCloud platform to provide real-time insights to crews directly at drilling sites, the companies said.
SLB’s Big Boost from Digital Offsets Flat Trends in Oil, E&P
2025-01-20 - SLB’s digital revenue grew 20% in 2024 as customers continue to adopt the company's digital products, artificial intelligence and cloud computing.
Digital Twins ‘Fad’ Takes on New Life as Tool to Advance Long-Term Goals
2025-02-13 - As top E&P players such as BP, Chevron and Shell adopt the use of digital twins, the technology has gone from what engineers thought of as a ‘fad’ to a useful tool to solve business problems and hit long-term goals.
Iveda Deploys New Liquid Storage Management Solution for Gulf Western Oil
2025-02-26 - IoT servicer Iveda’s LevelNOW system uses sensors to deliver real-time information about tank levels.
PrePad Tosses Spreadsheets for Drilling Completions Simulation Models
2025-02-18 - Startup PrePad’s discrete-event simulation model condenses the dozens of variables in a drilling operation to optimize the economics of drilling and completions. Big names such as Devon Energy, Chevron Technology Ventures and Coterra Energy have taken notice.