Texas to Louisiana crude link moves forward

OREANDA-NEWS. July 31, 2015. Phillips 66, Energy Transfer Partners and Sunoco Logistics have formed a joint venture to move crude from the Texas coast into Lake Charles, Louisiana, with plans to eventually deliver into the crude hub at St James.

Sunoco Logistics will operate the pipeline system, known as Bayou Bridge. Phillips 66 will hold a 40pc interest in the venture, and Energy Transfer (ETP) and Sunoco Logistics will each hold 30pc interests. ETP and Phillips 66 held an open season on the project in February.

The companies have also launched an expansion open season to connect the Bayou Bridge system on into the crude hub at St James, Louisiana.

Rising inland crude production and constraints between Texas and Louisiana have effectively split crude economics in the US Gulf coast at the Texas-Louisiana border. Texas coastal refiners have pipeline access to heavy Canadian crude, light sweet production from west and south Texas and more traditional waterborne imports.

But larger volumes of US crude production struggle to move east from Texas to Louisiana. Refiners rely on costlier waterborne deliveries of light, sweet domestic production to make up for a lack of pipeline access.

ETP previously sought shipper interest in a similar line with Enbridge from Patoka to St James, but without a Texas stop or Bakken connection. The line did not attract enough shipper commitments.

The Bayou Bridge system would connect to a planned 450,000 b/d to 570,000 b/d pipeline running from the Bakken fields in North Dakota through Patoka, Illinois, and down to Nederland, Texas. Phillips 66, which purchased a Nederland terminal last June, has a 25pc stake in that project.

The companies expect the 30-inch diameter Nederland to Lake Charles segment will begin commercial operations in early 2016. A successful expansion open season would construct a St James connection to begin service in the second half of 2017.