UPDATE 2-Plains All American expects Wink-to-Webster crude pipe construction to begin by year-end

NEW YORK (Reuters) – Plains All American Pipeline LP said on Tuesday it expects to begin construction on the Wink-to-Webster Permian crude pipeline by the end of the year and is targeting bringing the line to service by early 2021. Plains has already ordered a majority of equipment needed to commence construction such as 36-inch (91.5-cm) domestic line-pipe and long-lead materials, a company executive said during the quarterly earnings call. The Wink-to-Webster Pipeline is a joint venture among affiliates of Exxon Mobil Corp , Plains All American, MPLX LP, and Delek US, among others. The pipeline system is expected to transport more than 1 million barrels of crude oil and condensate per day from the Permian Basin in West Texas, the biggest U.S. oil basin, to the Texas Gulf Coast. For the full year 2020, Plains said it expects Permian production to grow, on average, about 500,000 bpd – about 100,000 bpd on average less than the company’s prior estimates. “We have further calibrated the anticipated impact of producer capital discipline on drilling and completion activity,” Chief Executive Willie Chiang said. In August, Plains brought the Cactus II Permian crude pipeline online, bringing much needed relief to the region, where crude had been backed up for about a year as a production surge outpaced available pipeline capacity. Over the past year, rig counts across the country have dropped as U.S. producers cut spending on new drilling as they focus more on earnings growth instead of increased output. The Cactus II line, which has a capacity of 670,000 barrels per day (bpd), is connected to Taft, Ingleside & Corpus Christi, Texas, Plains said. The company also said it expects to bring the reversed Capline crude pipeline and the connection to Diamond pipeline into service for light crude in the first half of 2021 and crude service in early 2022. Capline is currently one of the largest crude pipelines in the country and runs from the Gulf Coast to refineries in the Midwest. Volumes on Capline, once a major artery for imports and Gulf of Mexico crude used by U.S. Midwest refiners, have declined sharply as the U.S. shale boom and the lifting of a decades-long crude export ban pushed inland crude to the East Coast and Gulf Coast. Plains said the 100,000-bpd expansion of the Saddlehorn pipeline that runs from Colorado to the main U.S. storage hub in Cushing, Oklahoma, is expected to be complete in late 2020.

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