Houston-based Plains All American oil pipeline giant is buying big into the resurgent Permian Basin through new pipeline acquisitions and expansions.
Plains said Tuesday it will buy the new Alpha Crude Connector pipeline gathering and storage system for $1.2 billion from Midland-based Concho Resources and Dallas private-equity firm Energy Spectrum Capital. Plains also said it will expand its existing BridgeTex and Cactus pipeline systems in West Texas.
The Alpha Crude Connector system was built primarily in southeastern New Mexico and completed in late 2015. Concho built it with Frontier Energy Services, an Energy Spectrum portfolio company, and put it up for sale late last year as activity picked up in the resilient Permian, particularly in the Delaware Basin portion.
The Permian — primarily in West Texas and extending into New Mexico — is now home to more than half of the nation’s active drilling rigs as the oil sector slowly begins to rebound from a two-year bust.
“The Permian Basin is a world class resource play and we are pleased to announce this strategic acquisition,” said Plains Chairman and CEO Greg Armstrong said in Tuesday’s announcement.
Permian Basin crude oil production could grow by 50 percent in the next two or three years, Armstrong said.