Kinder Morgan Energy Partners LP and Phillips 66 said Thursday that they reached a deal for Kinder Morgan build an extension to its pipeline and transport crude and condensate from the Eagle Ford formation to a Phillips 66’s refinery in Texas.
Under the agreement, the Houston-based pipeline company will build a 27-mile, 12-inch diameter lateral pipeline extension off its Kinder Morgan crude condensate pipeline. Oil refiner Phillips 66 will get a “significant portion” of the new pipeline’s initial capacity of 30,000 barrels per day, which will be expandable to 100,000 barrels per day, the companies said.
Kinder Morgan will invest about $90 million in the project, which also includes the construction of a five-bay truck offloading facility and three new storage tanks at Kinder Morgan facilities in Texas. Construction is scheduled to begin in the fourth quarter, assuming the needed environmental and regulatory approvals are received, the companies said.
The project is expected to be immediately increase cash available to Kinder Morgan unit holders once it’s completed in the first quarter of 2014, Kinder Morgan said.
Kinder Morgan units fell 10 cents to close at $81.80, while Phillips 66 shares fell 15 cents to close at $41.33.