Plains All American Pipeline, L.P. will construct the Diamond Pipeline, a 440-mile (708 km), 20-inch crude oil pipeline that will provide capacity of up to 200,000 barrels per day of domestic sweet crude from the Plains Cushing, Okla. terminal to the Valero Memphis Refinery, and the ability to access Valero Energy Partner’s Collierville pipeline. The total project investment is expected to be approximately $900 million and is expected to be completed in late 2016.
The Diamond Pipeline project is underpinned by a long-term shipping agreement with Valero and a related contract for storage and terminalling services at the Plains Cushing Terminal.
Valero holds an option until January 2016 to become a partner in the Diamond Pipeline and purchase a 50% interest. Construction of the pipeline will enhance the refinery’s long-term ability to produce gasoline, diesel and jet fuel for the greater Memphis and eastern Arkansas area.
The Valero Memphis Refinery originally was constructed in 1941 with numerous expansions to its present rated capacity of 195,000 barrels per day (BPD) of light, low-sulfur crude oil. The refinery currently primarily processes light and sweet crude oil received through the Capline pipeline. Nearly 100% of its production is in light products, including regular and premium gasoline, diesel, jet fuel and petrochemicals. Valero acquired it in 2005.
Plains All American Pipeline, L.P. is a publicly traded master limited partnership that owns and operates midstream energy infrastructure and provides logistics services for crude oil, natural gas liquids, natural gas and refined products. On average, PAA handles more than 3.5 million barrels per day of crude oil and NGL on its pipelines. PAA is headquartered in Houston, Texas.