By MATT BLOIS
The Brentwood energy company Delek is partnering with another company to expand the capacity of an oil pipeline in Oklahoma.
The plan to expand this pipeline comes after the company, along with several other partners, decided not to build a pipeline across Texas. Other energy companies are building pipelines in the same area.
That scrapped pipeline would have transported oil from the Permian Basin in West Texas, where crude oil is abundant, to the Gulf of Mexico, where energy companies can export refined products.
Instead, Delek plans to partner with a new company to expand the capacity of a pipeline running from from Cushing, Oklahoma to Longview, Texas.
A subsidiary of Delek purchased a 33% stake in Red River Pipeline Company for $128 million. The company plans to expand the capacity of a pipeline in Oklahoma from 150,000 barrels per day to 235,000 barrels per day.
Delek won’t use the entire capacity of the pipeline, so it will be able to sell access to the pipeline to other companies. In a press release, CEO Uzi Yemin also said the expanded pipeline will diversify Delek’s access to crude oil.
Oil in the Permian Basin in West Texas has been relatively cheap in recent years. As other companies build pipelines to transport that oil away from West Texas the oil could become more expensive. In a press release, Delek said the pipeline expansion in Oklahoma could be a buffer against that change.
The company expects the expansion project to be complete by the first half of 2020.