Plains All American Pipeline Buys Velocity Midstream’s Eagle Ford Assets

Plains All American Pipeline (PAA) announced plans to acquire Volocity Midstream’s – Velocity South Texas Gathering assets.  The pipeline and midstream deal includes over 120 miles of crude oil and condensate pipe with capacity of 150,000 barrels per day through parts of Dimmit, La Salle, and Webb counties. The pipeline system is underpinned by volume commitments from major producers in the area. If warranted, the system can be expanded to handle 185,000 barrels per day.

The system also has storage capacity at Catarina and Gardendale. The Gardendale facility ties directly into Plains All American’s existing Eagle Ford pipeline.

The deal was part of a larger announcement by PAA that included assets on the East Coast, in the Permian Basin, and in Canada for a total of $620 million. Much of the midstream activity in South Texas to date has been new projects, but we expect more consolidation in the coming months as midstream companies look to gain a true foothold in the area. Infrastructure has been one of the few restricting factors in the play, but major projects are on pace to remedy current concerns over the next couple of years.

The Partnership recently closed the acquisition of 100 percent of the member interests in Velocity South Texas Gathering, LLC (“Velocity”) from Velocity Midstream Partners, LLC. The deal includes approximately 120 miles of crude oil and condensate gathering and transportation pipelines currently in advanced stages of construction in the area of South Texas.

The Gardendale storage hub will have access to PAA’s Eagle Ford pipeline as well as other transportation alternatives, including third party pipelines, truck and rail. Over the next 18 to 24 months, PAA expects to complete current construction, extend the system to access additional condensate barrels and other crude oil-oriented portions of the major resource play, and increase terminal capacity at Gardendale from 150,000 barrels to 250,000 barrels.

Read the entire news release at paalp.com

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Kenneth E. DuBose

Kenneth E. DuBose

Kenneth DuBose is the past President of Cheyenne Minerals Inc., an independent oil and gas operator. He began his energy industry career with ARCO Oil & Gas. Mr. DuBose then directed development of natural gas storage projects with Tejas Power Corp. He was a founding member of U.S. Minerals, (acquired by Torch Energy in 1999) a provider of internet based education for America’s mineral owners. Mr. DuBose holds a BS in Petroleum Engineering from Mississippi State University. He has served on various industry steering committees, non-profit boards, and is an active member of the Society of Petroleum Engineers, the National Association of Royalty Owners, the American Association of Professional Landmen, as well as being a Registered Investment Advisor. He writes on topics of oil and gas investing, wealth management and personal finance, having appeared in the Wall Street Journal, Kiplinger’s, Kiplinger’s Personal Finance, Houston Business Journal, Financial Advisor and various radio and TV outlets.

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