Delek US Holdings Inc. has announced that two new crude oil pipeline development projects are expected to improve its sourcing flexibility and its Tyler refinery in Texas has completed the turnaround and expansion project, and has begun the restart process.
Tyler refinery update
The Tyler refinery turnaround has been completed and the refinery is now in the restart process. It is expected to return to normal operations over the next week. During the turnaround, the final work to expand the nameplate capacity to 75 000 bpd from 60 000 bpd was completed. In addition, the fluid catalytic cracking reactor was replaced with state of the art technology.
Sourcing flexibility improvement projects
Delek US, through wholly owned subsidiaries, expects to be an anchor shipper on the following pipelines upon successful completion of each project.
- Caddo Pipeline: This 80 000 bpd pipeline project will be a 50/50 joint venture with a subsidiary of Plains All American Pipeline, L.P. and Delek Logistics Partners, LP. It will be a 12 in., 80 mile crude oil pipeline originating in Longview, Texas, with destinations in the Shreveport, Louisiana, area. Completion is expected in mid 2016 and through connections in the Shreveport area this pipeline will be able to deliver crude to Delek US’ El Dorado, Arkansas refinery. Plains will build and operate this pipeline on behalf of the joint venture.
- RIO Pipeline (Delaware Basin to Midland Pipeline Project): This 55 000 bpd pipeline project will be developed by Rangeland Energy, and Delek Logistics will be a 33% participant. Completion of this project is expected in the first half of 2016. It consists of a 12 in., 107 mile pipeline originating in north Loving County, Texas, near the Texas-New Mexico border and terminating in Midland, Texas. This pipeline will have the capability to expand to 85 000 bpd or more with additional capital investments. Through connections in Midland, Texas, this project will deliver crude to take away pipelines located in the Midland area. Rangeland will build and operate these assets on behalf of the joint venture.
Uzi Yemin, Chairman, President and Chief Executive Officer of Delek US, stated: "We have continued to take steps to improve our operations and ability to generate free cash flow. These new pipelines are expected to increase our crude sourcing flexibility in 2016 by improving our access to Midland and Cushing crude supplies. With the completion of our Tyler refinery turnaround and expansion project we have reached the end of a large capital investment programme in our refining segment. This programme resulted in increased crude slate flexibility and nameplate capacity, as well as the replacement of the FCC reactors and the completion of turnarounds at both refineries over the last year. This should improve our free cash flow potential as our capital expenditure needs are expected to decline in the second half of 2015. We remain focused on creating long term value for our shareholders by growing our business, while returning cash to our shareholders through dividends and our US$125 million share repurchase programme."
Adapted from press release by Rosalie Starling