Sugar Land-based Lotus Midstream plans to join Exxon Mobil and Plains All American to construct a multibillion-dollar crude oil pipeline system from West Texas to Houston and Beaumont.
Lotus, a new company backed by private equity funding, is entering the race with Exxon and Plains to build out pipeline networks that stretch hundreds of miles across Texas to deliver crude from the booming Permian Basin to refining and port hubs near Houston.
Lotus, Exxon and Plains All American Pipeline are expected to create a formal joint venture soon.
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Lotus first made waves just a month ago when it agreed to buy a Texas pipeline system from Houston-based Occidental Petroleum. The Centurion pipeline system extends from the Permian to the Cushing, Okla. oil storage and transportation hub.
Lotus is backed by the San Antonio private equity firm EnCap Flatrock Midstream.
Exxon Mobil and Plains announced the pipeline project in June.
Plains and Oklahoma-based Magellan Midstream Partners recently expanded their BridgeTex oil pipeline, which has served as the major artery from West Texas to the Houston region. Permian oil production, however, is at a record high and rising and the lack of pipelines are creating bottlenecks that hamper the pace of growth and create discounts to Permian-produced oil.
Earlier this year, Exxon Mobil said it plans to triple its oil and gas production in the Permian by 2025, while also spending more than $2 billion on transportation and terminal upgrades in west Texas, including expanding its crude oil terminal in Wink.. This proposed pipeline would originate at Wink.
Last year, Exxon Mobil agreed to spend up to $6.6 billion to buy the Permian acreage of Fort Worth’s prominent Bass family to more than double its Permian acreage holdings.Share this article: