Dallas-based Holly Energy Partners, L.P. and Houston-based Plains All American Pipeline announced the formation of the Cushing Connect Pipeline & Terminal LLC, according to a press release issued on Thursday.
The 50/50 joint venture was created to develop and construct a new 160,000 barrel per day common carrier crude oil pipeline that will connect the Cushing, Oklahoma crude oil hub to the Tulsa, Oklahoma refining complex owned by a subsidiary of HollyFrontier Corporation. The joint venture also instills ownership and operation of 1.5 million barrels of crude oil storage at the Cushing terminal. The joint venture terminal is expected to be in service during the second quarter of 2020 while the pipeline is expected to be in service during the first quarter of 2021.
“The new joint venture will provide growth to HEP by insourcing logistics spend and provide the capability to supply 100% of HFC’s Tulsa Refinery crude throughput,” said George Damiris, Chief Executive Officer 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.”
“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,” said Jeremy Goebel, Executive Vice President – Commercial, Plains All American. “This investment expands our relationship with a key operational hub service customer and provides additional long-term alignment on movements to the Tulsa refinery.”
The joint venture will contract with an affiliate of Holly Energy Partners to manage the construction and operation of the pipeline and with an affiliate of Plains to manage the operation of the joint venture terminal, according to the press release. The total joint venture investment will be shared proportionately among the partners and is estimated to total nearly $130 million, including the existing joint venture terminal contributed by Plains valued at approximately $40 million.