Phillips 66 Partners will partner with a midstream company to develop a pipeline and rail terminal to move more crude out of the Bakken Shale in North Dakota.
The master limited partnership formed by the Houston-based refining, pipeline and chemicals company on Friday announced plans to form joint ventures with Paradigm Energy Partners, a midstream company based in Irving, Texas that gathers and transports oil and gas in the Bakken Shale in North Dakota and Eagle Ford Shale in South Texas.
The joint ventures will support the construction of the two previously announced projects aimed at providing long-term and cheaper options to transport crude from a region that produces 1.2 million barrels per day of oil.
The 76-mile Sacagawea Pipeline is expected to transport oil pumped from McKenzie County in the heart of the Bakken to rail and pipeline destinations in Mountrail County in North Dakota. Paradigm will build the pipeline and Phillips 66 will operate it. Together, the companies will hold an 88 percent stake in the project and split the costs of construction.
The Sacagawea pipeline will connect to a 710-acre rail terminal in Palermo, which is expected to provide access to the East and West coasts through the BNSF railway. Designs call for the Palermo Rail Terminal to have an initial capacity of 100,000 barrels per day, with the flexibility to expand to 200,000 barrels per day. The two companies will share construction costs and Phillips 66 will own and operate the terminal.
Under the terms of the rail joint venture, Phillips 66 will own a 50 to 70 percent interest while Paradigm’s stake will be subject to reaching certain milestones.
Both the pipeline and terminal are expected to begin operations in the first quarter of 2016.
Phillips 66 has been heavily investing in rail cars and other infrastructure in the Bakken region to easily carry cheap domestic crude to refineries along the coast.