Plains All American Pipeline, L.P. (ticker: PAA) has completed the open season for its Cactus II pipeline, securing long-term third-party shipper contracts totaling 525 MBOPD. The pipeline has an initial capacity of 585 MBOPD and stretches from the Permian Basin to the Corpus Christi/Ingleside area.
Cactus II Pipeline
Source: Plains All American Pipeline
Carrying capacity
Out of the 525 MBOPD secured, 425 MBOPD comes from long-term minimum volume commitments, while 100 MBOPD of commitments come from long-term acreage dedications. Roughly 60 MBOPD is reserved for walk-up shippers.
Additionally, affiliates of certain third-party contracted shippers have the option to become joint venture partners for up to 35% of the Cactus II pipeline. The remaining 65% will be retained by Plains All American Pipeline, who will serve as the operator.
Covering top-producing Texas counties
The Cactus II pipeline system will have gathering points located in Orla, Wink, Midland, Crane and McCamey counties in Texas. With the addition of incremental pumping capacity, the system will be capable of transporting approximately 670, MBOPD.
The total carrying capacity includes a combination of existing pipelines, as well as two new 26-inch pipelines. The first new pipeline will span from Wink to McCamey, Texas, and the second pipeline will connect McCamey to the Corpus Christi/Ingleside area, where the hydrocarbons will be able to access multiple docks.
$1.1 billion-dollar price tag
The cost of implementing the two new pipelines will total approximately $1.1 billion, and Plains All American Pipeline will pay for approximately $700-$750 million. This cost was included in Plains All American Pipeline’s capital plan, disclosed earlier this month, and assumes exercise of the third-party options to participate in the joint venture.
The pipeline is predicted to be operational in Q3 2019.
PAA Pipeline Overview
Note: The pipeline with the “To Corpus” arrow pointing SE is the Cactus II
Source: Plains All American Pipeline
