EnCap Flatrock Midstream, a San Antonio private equity firm with dealings in Oklahoma is backing Lotus Midstream in a joint venture to build a multibillion dollar crude pipeline from West Texas to Houston and Beaumont.
Lotus is joining Exxon Mobil and Houston’s Plains All American, another firm with extensive pipeline operations in Oklahoma.
At the same time, ArcLight Capital, another private equity firm announced it plans to buy out the Houston pipeline company American Midstream Partners and take it private.
Industry observers say the two major pipeline ventures are the result of a lack of pipeline capable of meeting the demand in the Permian Basin. There is a lack of adequate pipelines to move the oil out of west Texas and into the refining and export hubs in the Houston and Corpus Christi areas.
Some of the regional systems are owned by American Midstream Partners. But ArcLight holds a nearly 25 percent share in the company and plans to acquire the units of the company it doesn’t already own.
As for Lotus, it was formed at the start of the year and a month ago agreed to buy the Centurion pipeline that extends from the Permian to the Cushing oil storage and transportation hub in Oklahoma.
Lotus is planning to create a formal joint venture soon with Exxon Mobil, headquartered in Irving, and Plains All American Pipeline. Exxon and Plains announced the pipeline project in June.
Plains and another partner, Magellan Midstream Partners of Oklahoma, recently expanded their BridgeTex oil pipeline, which has served as the major artery from West Texas to the Houston region. Bottlenecks in the pipeline systems are slowing the the pace of growth in the Permian and forcing producers to sell their crude at substantial discounts to prices on the Gulf Coast.
