Texas Permian Basin also increased interest in pipelines
The Permian Basin land rush is spreading to oil and gas pipelines.Getting the oil out of the ground is just part of the equation. Pipelines are needed to get it to refineries and ports. The lack of pipelines caused an increase use of rail transportation in recent years.
Plains All American Pipeline LP said it will expand its crude oil gathering system in America’s hottest shale play through a $1.2 billion purchase from Concho Resources Inc. and Frontier Midstream Solutions LLC. The Alpha Crude Connector System is located in the oil-rich northern portion of the Permian’s Delaware Basin and will serve to expand the volume that the company is able to move from West Texas to Corpus Christi and other delivery points, Plains said Tuesday.
The deal is the latest of many in the Permian, the largest and most prolific oil field in the U.S., as its crude-soaked layers of rock have delivered good returns for producers even during the market crash. On Monday, Targa Resources Corp. agreed to buy a set of pipelines in the region from Outrigger Energy LLC for as much as $1.5 billion. The Permian’s oil production has almost doubled since 2012, while the natural gas that comes along with the crude has also turned it into the second-richest gas play in the country.
“We expect aggregate crude oil production on the dedicated acreage to double over the next two to three years,” Greg Armstrong, chairman and chief executive officer of Plains, said in the statement. “We believe overall Permian Basin crude oil volumes have the potential to grow as much as 50 percent or more during this same time period.”
BridgeTex Pipeline Company, in which Plains owns a 50 percent interest, said Monday it will expand its line from Colorado City, Texas, to Houston to help transport approximately 400,000 barrels a day.