Pacific Energy Partners, L.P. to Commence Construction of Crude Oil Pipeline to Salt Lake City
04 April 2006 - 1:21AM
Business Wire
Pacific Energy Partners, L.P. (NYSE:PPX) ("Pacific Energy")
announced that Rocky Mountain Pipeline System LLC ("RMPS"), its
wholly-owned subsidiary and primary operating entity in the Rocky
Mountain region, is proceeding with the expansion of its crude oil
pipeline system from the terminus of Frontier Pipeline near
Evanston, Wyoming to the Salt Lake City, Utah refining complex.
RMPS will construct a new 16-inch pipeline, approximately 91 miles
in length, which will parallel and use the common rights-of-way of
its existing U-Crude pipeline to Salt Lake City for much of that
distance. The new pipeline will be able to transport multiple
grades of crude oil in segregated batches, including Canadian heavy
crude oil and synthetic crude oil. It is designed to provide the
capacity necessary to meet increasing crude oil demand in Salt Lake
City, both in the near-term and well into the future. The new
pipeline will be constructed in two phases, with construction of
the first phase scheduled to begin immediately and be completed in
the fourth quarter of 2006. The completion of the first phase will
add additional capacity into Salt Lake City of approximately 12,000
barrels per day. The second phase is expected to be completed in
October, 2007. Capacity of the completed pipeline will be
approximately 95,000 barrels per day. "We are excited to commence
construction of this new pipeline to Salt Lake City," stated Irv
Toole, President and Chief Executive Officer. "Crude oil demand in
Salt Lake City continues to grow, and this pipeline will provide
ample capacity for both light and heavy crude oil for the
foreseeable future. This project is an important component of
Pacific Energy's strategy to serve the Rocky Mountain refining
market by providing a strategic pipeline corridor from Edmonton,
Alberta to Salt Lake City for synthetic crude oil supplies accessed
directly in Edmonton, as well as conventional Canadian and Rocky
Mountain crude oil. The project is expected to be accretive to
distributable cash flow to our limited partners." RMPS has the
necessary permits from the Bureau of Reclamation for the first 46
miles of pipeline, which will be constructed in the initial phase
of the expansion, and is in the process of securing the necessary
permits for the balance of the project. The majority of the Salt
Lake City refiners have entered into 10-year transportation
agreements with RMPS for firm commitments to dedicate all volumes
shipped on Frontier Pipeline to the new 16-inch pipeline. As
previously announced, the first phase of the Salt Lake City
pipeline project is expected to cost $32 million. However, Pacific
Energy's total 2006 expansion capital budget of $106 million is
being increased to $118 million to reflect certain costs associated
with the second phase of the project, which are now expected to be
incurred in 2006. The total cost for both phases of the project is
expected to be approximately $77 million. About Pacific Energy:
Pacific Energy Partners, L.P. is a master limited partnership
headquartered in Long Beach, California. Pacific Energy is engaged
principally in the business of gathering, transporting, storing and
distributing crude oil, refined products and other related
products. Pacific Energy generates revenues by transporting such
commodities on its pipelines, by leasing capacity in its storage
facilities and by providing other terminaling services. Pacific
Energy also buys and sells crude oil, activities that are generally
complementary to its crude oil operations. Pacific Energy conducts
its business through two business units, the West Coast Business
Unit, which includes activities in California and the Philadelphia,
PA area, and the Rocky Mountain Business Unit, which includes five
Rocky Mountain states and Alberta, Canada. Pacific Energy owns a
22.22% interest in and is the operator of the Frontier Pipeline and
will be the 100% owner and operator of the new pipeline into Salt
Lake City. This news release may include "forward-looking"
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. All statements other than statements of
historical fact included or incorporated herein may constitute
forward-looking statements. Although Pacific Energy believes that
the forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to be correct including
the estimated capital cost of the new pipeline. The forward-looking
statements involve risks and uncertainties that may affect Pacific
Energy's operations and financial performance. Among the factors
that could cause results to differ materially are those risks
discussed in Pacific Energy's filings with the Securities and
Exchange Commission, including our Annual Report on Form 10-K for
the year ended December 31, 2005. For additional information about
the partnership, please visit www.PacificEnergy.com.
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