Plains, ExxonMobil plan Permian crude line JV

ExxonMobil and Plains All American Pipeline have agreed to develop a 1mn b/d crude and condensate pipeline from the Permian basin to the Texas Gulf coast.

The two companies have signed a letter of intent to pursue a joint venture (JV) on the project.

The proposed pipeline would move more than 1mn b/d of oil from Wink and Midland in west Texas to Webster, Baytown and Beaumont.

The companies would place a priority on using existing pipeline corridors, according to a statement. They did not give an estimated timeline for the project.

ExxonMobil has a 557,000 b/d refinery in Baytown and a 348,000 b/d refinery in Beaumont.

Midstream companies are racing to add takeaway capacity out of the Permian amid booming production and growing interest in exporting US crude.

Plains is building the 670,000 b/d Cactus 2 line from west Texas to the port of Corpus Christi, Texas, and is weighing a further expansion of the Cactus system.

ExxonMobil has a joint venture with Energy Transfer Partners in the Permian which includes the Permian Express pipeline system. The major is also boosting drilling in the basin this year.

A lack of pipeline takeaway capacity has contributed to steep discounts for crude at Midland, Texas, in recent weeks.

The July WTI Midland value was $15.76/bl below July WTI Houston yesterday, according to Argus data.