(EnergyAsia, November 10 2011, Thursday) — NYSE-listed Oiltanking Partners LP has announced that its board has approved expansion projects to construct two new crude oil pipelines in the Houston Ship Channel and approximately one million barrels of new crude oil storage capacity at the Oiltanking Houston terminal in the US.

Due for completion in 2013, the US$80-85 million project is the first phase of anticipated capital expenditures to meet rising demand for infrastructure and storage services at Oiltanking Houston.

The company said the project’s scope includes the following:

•        Reversal of an existing 24-inch pipeline that currently originates from Oiltanking Houston to multiple Houston Ship Channel refineries;

•        Extension of the reversed pipeline to connect to Genoa junction on the south side of the channel;

•        Construction of a new 30-inch pipeline from Oiltanking Houston along the channel to the area refineries previously served by the 24-inch pipeline; and

•        Construction of one million barrels of crude oil storage at the Partnership’s Houston terminalling facility.

Due to the expansion of crude oil supplies in the US from domestic shale plays and Canadian oil sands, additional long haul pipeline systems are either in development or under construction to transport crude oil to the Houston market and supply the Gulf Coast refineries. Additionally, other pipelines are being built or reversed to deliver crude oil from Cushing and West Texas to the Gulf Coast refineries and to alleviate the current over-supply situation in Cushing, Oklahoma.

Oiltanking said the new project provides connectivity to Genoa junction and has been designed to accommodate additional customer throughput volumes as growing crude oil supplies reach the Houston Ship Channel market.

The company said it is also ready to construct additional crude storage tank capacity to support growing demand for its services.
Carlin G. Conner, the company’s President, CEO and chairman, said:

“Over the last three decades, Oiltanking Houston has built a premier crude oil distribution center by investing in pipeline connectivity, expansive deep waterfront, and substantial crude tankage.

“In anticipation of these new crude supplies being delivered to the Houston market, we are expanding and strengthening the premier crude oil distribution system in the Houston Ship Channel by connecting to these pipeline junctions and building additional tankage. Interest from both existing customers and new customers, including refiners, producers and marketers, reaffirms our expectation of strong increases in demand for new crude capacity.

“In addition to the expansion projects currently approved, we foresee additional tank expansion opportunities developing with the dramatic shift in crude oil logistics. As appropriate, we will prudently evaluate these opportunities in the future with the goal of increasing our distribution to unit-holders over time.

“By connecting to the planned inbound flows of new crude sources, along with our superior waterfront and premier distribution systems, we believe Oiltanking Houston will be well positioned for continued growth.”

Oiltanking said it has obtained the required environmental and internal approvals to start construction and expects to complete construction of the pipelines and the additional crude oil storage capacity by the first quarter of 2013.