Welspun gets $47 million deal for Diamond Pipeline project, 440-mile crude line will cross heart of Arkansas

Little Rock-based Welspun Tubular has received a $47 million contract to manufacture two-thirds of the pipe needed to construct the 440-mile Diamond Pipeline, a controversial multistate project that will ship light, sweet premium grade crude oil from Cushing, Okla., to Valero Corp.’s sprawling refinery facility in Memphis, Tenn.

The project, a joint venture between Plains All American Pipeline and Valero Corp., has been in the making almost two years after the two energy giants announced in August 2014 plans to build the multistate 20-inch crude oil pipeline across Arkansas, running from Plain’s terminal in world’s largest oil store facility in central Oklahoma to the Valero’s 195,000 barrels per day refinery just across the state line in Memphis.

“On behalf of our more than 500 employees in the Little Rock area, we’re proud to contribute to bringing the benefits of this important piece of energy infrastructure to our community,” Rusty Fisher, Welspun senior vice president of marketing and sales, said in a statement. “Through this prestigious pipeline order, Welspun Tubular continues to fulfill its commitment of supporting jobs for the state of Arkansas.”

Officials say the project is estimated to cost about $900 million and will provide approximately $11 million per year in property tax revenue along the pipeline route. During construction, the project is expected to create nearly 1,500 new contract construction positions across Oklahoma and Arkansas and some 15 permanent jobs along the pipeline once it is complete.

DRINKING WATER, EMINENT DOMAIN ISSUES WITH DIAMOND PIPELINE
The Diamond Pipeline project is also not without its own controversy. The Arkansas Public Service Commission is expected to hear testimony about the joint venture pipeline project’s permit application on Aug. 18 in Little Rock.

Opponents of the project have expressed concerns that the crude oil pipeline will cross several Arkansas drinking water sources and spark eminent domain fears among landowners in several north-central Arkansas counties where the project will cross.

Diamond Pipeline officials say they expect to have engineering plans finalized, and permits and right-of-way acquisition completed soon in hopes of kick-starting construction by the end of 2016 and finish the project in 2017.

Plains officials have gone the extra mile to communicate in its marketing materials that its pipeline project is not associated with similarly-sounding Plains & Eastern Clean Line power transmission project, a $2 billion wind energy development that has also raised concerns about large projects that execute eminent domain authority to gain right-of-way access to private land.

Talk Business & Politics was unable to reach Diamond Pipeline officials before deadline to respond to questions concerning its upcoming here before Arkansas state regulators.

MUCH NEEDED BOOST FOR WELSPUN IN LITTLE ROCK
The project is good news for Welspun, which only weeks ago announced plans to lay off more than 100 workers at its Little Rock Port facility because of the downturn in global crude oil prices. Welspun, whose parent company is based in Mumbai, India, also manufactured more than 700 miles of the 36-inch-diameter steel pipe needed to complete the controversial Keystone Pipeline project.

Following President Barack Obama’s announcement in early November 2015 rejecting TransCanada’s Keystone XL pipeline proposal after a lengthy State Department review of the controversial project, there was a barrage of criticism from Arkansas’ Congressional delegation who said the president’s decision would kill Arkansas jobs.

In a video on the TransCanada website following the Keystone rejection by the Obama administration, Welspun officials say that more than 350 miles of pipe now lay idle at the Little Rock plant awaiting approval of the project.

Welspun manufacturing operations on the Arkansas River houses two state of the art pipe-making lines and employs more than 500 people in the Little Rock Area. The two pipe plants in Little Rock are capable of producing approximately 600,000 tons of line pipe ranging in diameters from 8-5/8- to 60-inches.

Welspun officials did not respond to queries from Talk Business & Politics on whether any of the recently laid off workers will be rehired following the announcement of the Oklahoma-to-Arkansas-to-Tennessee project.