New $2.5 billion pipeline coming to Sealy

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Phillips 66 and Plains All American Pipeline recently announced formation of a joint venture, Red Oak Pipeline LLC, and are proceeding with construction of the Red Oak Pipeline system that will bring crude oil to Sealy and elsewhere.

That is news to people in Sealy, especially to those who would normally know about such things.

“I checked with our crude oil group and Enterprise has not engaged in conversations with Phillips 66 as it relates to a Sealy connection,” said Rick Rainey, spokesperson for Enterprise Products, which operates the large oil tanks in Sealy. 

“So sorry but I know nothing about it,” said Robert Worley, executive director of the Sealy Economic Development Council. “The project will obviously have an impact on Sealy during the construction phase.”

Even Austin County Judge Tim Lapham was unfamiliar with it.

“There’s several pipeline projects in various stages of completion,” he said. “I’m not sure on the specifics of this one. The commissioners deal more with the pipelines than I do.”

A joint press release issued by the companies states, “The joint venture plans to construct a new 30-inch pipeline from Cushing to Wichita Falls and Sealy, Texas. From Sealy, the joint venture will construct a 30-inch pipeline segment to Corpus Christi and Ingleside and a 20-inch pipeline segment to Houston and Beaumont. Where feasible, Red Oak will utilize existing pipeline and utility corridors and advanced construction techniques to limit environmental and community impact.”

The companies said the pipeline system will provide crude oil transportation service from Cushing, Okla., and the Permian Basin in West Texas to Corpus Christi, Ingleside, Houston and Beaumont.

“Red Oak is underpinned with long-term shipper volume commitments. Initial service from Cushing to the Gulf Coast is targeted to commence as early as the first quarter of 2021, subject to receipt of applicable permits and regulatory approvals,” the companies said.

Red Oak will lease capacity in Plains’ Sunrise Pipeline system, which extends from Midland to Wichita Falls. Plains will lead project construction on behalf of the joint venture, and Phillips 66 will operate the pipeline. The project is expected to cost approximately $2.5 billion.

“We are pleased to partner with Plains to build Red Oak,” said Greg Garland, Phillips 66 chairman and CEO. “The pipeline provides a competitive outlet for shippers to access the key market centers along the Texas Gulf Coast from Cushing and the Permian. This investment aligns with our long-term strategy to grow our Midstream business with projects generating stable, fee-based earnings while further enhancing integration across our value chain.”

“Red Oak represents a capital-efficient industry solution that will utilize existing assets and provide pull-through benefits to our systems,” said Willie Chiang, CEO of Plains All American. “We look forward to working closely with Phillips 66 and our committed shippers to bring Red Oak into service and further optimize our assets upstream and downstream of the new pipeline system. We also look forward to creating jobs and supporting economic growth in Oklahoma and Texas.”

The joint venture plans to hold a supplemental binding open season to be announced at a later date that will enable additional shippers to enter into long-term transportation services agreements.

Attempts to reach the companies for additional information were unsuccessful at press time.

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