Holly Energy Partners (HEP) and Plains All American Pipeline have formed a joint venture to develop and construct a new 160,000-barrel-per-day common carrier crude oil pipeline in Oklahoma.
The Cushing Connect Pipeline & Terminal will connect the Cushing, Okla. crude oil hub to the Tulsa, Okla. refining complex, owned by a subsidiary of HollyFrontier Corp. (HFC). The companies entered into long-term commercial agreements for the assets.
The terminal is expected to be in service during second quarter 2020, and the pipeline is expected during first quarter 2021.
An affiliate of HEP will manage the construction and operation of the pipeline, and an affiliate of Plains will manage the operation of the terminal.
“The new joint venture will provide growth to HEP by insourcing logistics spend and provide the capability to supply 100 percent of HFC’s Tulsa Refinery crude throughput,” said George Damiris, CEO of the general partner of Holly Energy Partners. “Our partnership with Plains generates HEP growth, while providing HFC long-term control of a strategic asset.”
The partners will jointly invest $130 million in the joint venture, including the $40 million existing contribution by Plains for the terminal.
“This win-win joint venture aligns with our strategy of optimizing existing assets to provide value-chain solutions for long-term industry partners in a capital efficient manner,” added Jeremy Goebel, executive vice president – commercial, at Plains. “This investment expands our relationship with a key operational hub service customer and provides additional long-term alignment on movements to the Tulsa refinery.”