Delek US has agreed to take a 15% stake in the Wink to Webster Pipeline joint venture formed by ExxonMobil, Plains All American Pipeline, and Lotus Midstream.
Details of the Wink to Webster Pipeline
The joint venture will be developing the 1,046km-long Wink to Webster Pipeline designed to transport more than one million barrels of crude oil and condensate per day from the Permian Basin in West Texas to the Texas Gulf Coast.
According to Delek US, the expected net investment in the 36-inch pipeline system will be $340-380m (£279-312m).
The pipeline segments will span between origination points in Wink and Midland in Texas, with delivery points located near Houston, including Webster and Baytown, with connectivity to Texas City and Beaumont.
The Wink to Webster Pipeline, which is claimed to be supported by a significant volume of long-term commitments, is likely to be ready for operations in the first half of 2021.
Plains All American Pipeline will lead the construction on the Wink to Webster Pipeline on behalf of the joint venture with pre-construction activities initiated in January 2019. The pipeline project is expected to involve more than 3,100 construction roles.
Delek US said that the expected return on the pipeline investment will be more than the company’s internal hurdle rate of 15% for discretionary logistics projects. Apart from that, Delek US expects to benefit from more commercial opportunities generated by a growing midstream platform.
Delek US chairman, president and CEO Uzi Yemin said: “We remain focused on developing our midstream portfolio. We have patiently evaluated long-haul pipeline options and are pleased to join a strong set of partners in the Wink to Webster Pipeline LLC joint venture.
“This asset offers attractive return potential and it further integrates our portfolio by allowing us to offer additional services to producers in our gathering system.”
In another development, Delek Logistics Partners, the logistics arm of Delek US, entered into a new joint venture by acquiring a 33% stake in the Red River crude oil pipeline from Plains Pipeline, for about $128m (£105.06m).
