New Deals In The Pipeline To Ship Crude Oil To Shreveport Area, El Dorado Refinery

Plains All American Pipeline and Delek Logistics Partners LP announced Tuesday they have commenced an “open season” process for a proposed new pipeline that would ship crude oil into the Shreveport market, and also supply Delek’s refinery in El Dorado.

Caddo Pipeline LLC, which is a 50/50 joint venture between Houston-based pipeline giant Plains All American and Delek Logistics, said the open season process provides an opportunity for potential shippers to make long-term volume commitments for service from Longview to Shreveport in exchange for a discounted rate.

According to Plains and Delek officials, the Caddo Pipeline will originate at the Plains Atlas Terminal in Longview and will have the capacity to move up to 80,000 barrels of domestic crude oil per day (bbl/d) to supply refineries in the Shreveport area. It will also feed into Delek Logistics’ pipeline system supplying Delek’s 80,000 bbl/d refinery in South Arkansas.

Under the terms of a deal first announced in March, Plains will construct and operate the Caddo Pipeline. The total project investment is expected to be approximately $100 million and is expected to be completed in mid-2016.

In a separate announcement on Tuesday, Plains also said that it is conducting an open season for committed capacity on a proposed new crude oil pipeline from Cushing, Okla. to Longview, Texas. That proposed pipeline would originate at the Plains’ Cushing hub, which is a major trading hub and one of the largest crude oil storage facilities in the world. Officials with the Texas master limited partnership (MLP) said it will provide an initial capacity of nearly 120,000 barrels per day of light sweet crude to Longview.

Delek’s El Dorado refinery sells refined products through commercial contracts and through exchange agreements. The refinery primarily serves markets in Arkansas, Tennessee, and markets along the Enterprise Products Pipeline system that runs from the Gulf Coast into the Midwest. The refinery also supplies products to exchange partners on the Magellan and Colonial pipeline systems.

In 2011, publicly traded Delek Holdings acquired a majority stake in the former Lion Oil Co. refinery in El Dorado, held by Ergon Inc. Like many pipeline and midstream operators, Delek Holdings formed Delek Logistic Partners in 2012 as a publicly traded MLP to own, operate, acquire and construct crude oil and refined products logistics and marketing assets across the Midwest and Southeastern U.S.

Delek also operates 365 retail fuel and convenience stores located primarily in Tennessee, Alabama and Georgia, mainly under the MAPCO brand. Company officials said in their 2014 annual report that they hope to expand their small retail presence in Arkansas.

Delek US Holdings, which trades on the New York Stock Exchange under the symbol “DK,” currently holds a 2% general partner interest and a 60.4% limited partner stake in Delek Logistics. Public ownership represents 32.7% of the limited partner interest.

Delek Partners trades seperately on the NYSE under the stock symbol “DLK.” Both companies are headquartered in Brentwood, Tenn.