Sunoco Expands Role in Permian Basin with Terminal, Pipeline

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Researched by Industrial Info Resources (Sugar Land, Texas)--Sunoco Logistics Partners LP (NYSE:SXL) (Newtown Square, Pennsylvania), a pipeline operator and subsidiary of Energy Transfer Partners LP (NYSE:ETP) (Dallas, Texas), announced it will buy the remaining interest in a crude-oil terminal and pipeline system in Texas' Permian Basin from Vitol Group (Geneva, Switzerland), a subsidiary of Vitol Holding N.V. (Rotterdam, Netherlands), for about $760 million. Industrial Info is tracking $2.65 billion in active projects from Sunoco.

Sunoco said in a press release that it will acquire a crude-oil terminal with a capacity of 2 million barrels in Midland, and a crude-oil gathering and mainline pipeline system in the Midland Basin. As part of the deal, Sunoco will buy Vitol's 50% interest in SunVit Pipeline LLC, a joint venture that supplies Permian crude to a number of markets; Sunoco already has the other 50%. Sunoco also said it had obtained all crude oil inventories related to Vitol's crude-oil purchasing and marketing business in West Texas.

The two major parts of Vital's SunVit Pipeline Project, a $35 million pump station and a $45 million pipeline, were completed and put into service in August 2015. The station uses two 5,000-horsepower Best Pump packages from Siemens to support a 38-mile pipeline, which runs from Midland to Colorado City, in Texas. The 20-inch-diameter pipeline transports crude oil produced in the Permian Basin to Sunoco's Permian Express pipeline. For more information, see Industrial Info's project reports on the pump station and the pipeline.

"The addition of the Vitol system is an excellent synergistic fit to our growing crude platform in the Permian Basin," said Michael J. Hennigan, the president and chief executive officer for Sunoco, in the press release. "The Permian Basin is the most prolific of all of the U.S. shale areas, with strong growth expectations. The Vitol pipeline assets are located in what we believe are the three best counties in the Midland Basin."

Sunoco also is proposing about $75 million in additions to three crude-oil pump units for its Permian Express II pipeline, which carries crude oil produced in the Permian from Garden City to Wortham, in Texas: the $30 million Garden City station, the $30 million Colorado City station and the $15 million Corsicana station. If approved, each addition would involve the construction of buildings and the installation of motor-driven pump packages to increase capacity on the 200,000-barrel-per-day (BBL/d) line, which would be expandable to 400,000 BBL/d. For more information, see Industrial Info's project reports on the Garden City, Colorado City and Corsicana stations.

Sunco said that the acquisition will close in the fourth quarter, subject to closing conditions and regulatory approval.

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