Plains All American Pipeline and Phillips 66 say they have entered into a pipeline joint venture to transport STACK crude from northwest Oklahoma to the oil hub at Cushing.
Plains All American chief executive officer says STACK is one of the most exciting emerging resource plays in North America.
STACK, which stands for Sooner Trend, Anadarko Basin, Canadian and Kingfisher Counties, is an emerging oil play that is economic at oil prices below $45/bbl, according to IHS Energy.
"Though data is scarce and just 245 wells have been drilled, tested and delineated, our early IHS analysis shows that the Oklahoma STACK play can provide economic returns at less than $45 per barrel. This is good news for operators in this low-price environment," said Reed Olmstead, manager of the North America Supply Analytics Service at IHS Energy, in a report released in April.
Olmstead added though that it is very early in terms of STACK development and much more drilling is needed to identify the play's sweet spot.
IHS says that the main STACK operators include Devon, Newfield Energy, Husky Ventures, Cimarex Energy and Chaparral Energy.
The new deal between Plains and Phillips 66 establishes a partnership whereby Phillips 66 will trade $50 million in cash to Plains for 50 percent interest in an existing terminal at Cashion, Okla. with approximately 200,000 barrels of crude oil storage and an approximately 55-mile crude oil pipeline with a current capacity of approximately 100,000 barrels per day.
The system's connectivity to Cushing will provide a source of advantaged crude to Phillips 66's Ponca City Refinery, said chief executive officer Greg Garland.
The companies plan to invest an estimated $15 million to expand the STACK Pipeline by constructing a truck station, a lateral pipeline and 100,000 barrels of storage at the Cashion Terminal.
"Additional expansion opportunities, including expanding the capacity of the STACK Pipeline through looping the pipeline from the Cashion Terminal to Cushing, as well as other gathering opportunities, are also being pursued," the joint venture said in a statement.
"The STACK Pipeline and the initial expansion are supported by multiple long-term contracts as well as legacy production gathered by existing Plains crude oil pipelines that originate in western Oklahoma."
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