Caddo Pipeline LLC, a 50/50 joint venture (JV) between Plains All American Pipeline, L.P. PAA and Delek Logistics Partners, LP DKL, is conducting an open season for committed orders for the pipeline from Longview, TX to Shreveport, LA to check its commercial viability. The open season began yesterday and will end on Jul 23, 2015.
The proposed pipeline would start from Plains Longview Terminal with an initial capacity to transport 80,000 barrels per day of light sweet crude oil to Shreveport and Delek Logistics’ pipeline system supplying Delek US Holdings’ DK El Dorado, AR refinery.
Pipeline construction involves intensive capital investments and an open season verifies the ground reality for pipeline operators. This action will give the JV a clear indication as to the long-term demand for transporting volumes via this pipeline.
This March, Plains All American and Delek Logistics formed the JV to construct the 80-mile long, 12-inch wide Caddo Pipeline. The project, which is anticipated to be completed in mid-2016, is estimated to cost $100 million.
Plains All American is currently enhancing its operations in Texas. According to a report published by the U.S. Energy Information Administration in Dec 2014, proved reserves of crude oil and lease condensate have increased significantly in the region, one of the five-largest crude oil and lease condensate states in the U.S.
In the past, many oil and gas companies have tried to unlock the vast reserves in this area. Increasing exploration and production activities in Texas will subsequently enhance midstream service demand.
Currently, Plains All American carries a Zacks Rank #5 (Strong Sell). NuStar Energy L.P. NS with a Zacks Rank #1 (Strong Buy) is one of the better-ranked stocks in the industry at the moment.
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