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New Texas Permian Basin Pipeline

Another new oil pipeline is being laid in the Delaware Basin in Texas, which is part of the greater Permian Basin in west Texas. According to Benjamin Shattuck, an analyst with energy research firm Wood Mackenzie, “(t)he Permian is one of the most exciting areas in the lower 48 states right now.”

Western Refining Inc. has announced plans to build 40 miles of pipeline for light crude oil and condensate from the region. Western Refining is a refining and marketing company with headquarters in El Paso, Texas. Western has refineries in El Paso and in Gallup, New Mexico with a combined capacity of 153,000 barrels per day. These refineries primarily process sweet crude oil and are in a good position to buy crude at a discount from Delaware Basin producers.

The new 40 mile pipeline in the Delaware Basin will connect with the Mason Station crude oil facility in Reeves County, Texas owned by a sister company, Western Refining Logistics LP with a new facility at Wink Station in Winkler County, Texas. From Wink Station, the crude oil and condensate will be sent through other currently existing pipelines for delivery to the market. Mason Station was built last year as part of Western Refining’s expansion plans and was the first phase of its Delaware Basin Crude Oil Gathering System.

This new section of the pipeline will deliver up to 125,000 barrels of liquids with a greater than 45 degree gravity each day, and service is expected to start around June 2015. Western hopes to increase the capacity of its $60 million Delaware crude oil system and capitalize on the rapid growth of the area’s oil production. It plans to do this by expanding oil delivery capacities through the new pipeline, while using the company’s existing locational advantage and infrastructure. No cost for the 40 mile pipeline project has been disclosed so far.

The President and CEO of Western Refining, Jeff Stevens, said that “(g)iven the growth of light crude oil and condensate production in the Delaware Basin, we believe there is an opportunity to continue to expand and enhance our logistics capabilities. Our unique location and existing infrastructure present us with a number of opportunities to maximize our capabilities to deliver shale crude oil to both our refineries and third parties.”

New pipeline plans mean that new pipeline easements will be requested from landowners along the route of the new pipeline. Remember that pipeline easements are complex documents, and they will probably be in force for the rest of your lifetime. Be sure to consult an attorney that is familiar with pipeline easements so that any easement you sign has proper protections for your property and that you are getting the most compensation possible in your area.

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