Texaco Press Release - Texaco Trading And Transportation Inc. Announces 1,300 Mile Refined Product Pipeline
Texas pipeline acquired; Product supply contract signed; TTTI and Koch negotiating ownership joint venture
FOR RELEASE: FRIDAY, JUNE 20, 1997
DENVER, June 20 - Texaco Trading and Transportation Inc. (TTTI), a wholly-owned subsidiary of Texaco Inc., today announced that it and its subsidiary, Texaco Pipeline Inc., will build, own and operate a new system of pipelines and terminals to transport gasoline, diesel and jet fuels from the Texas Gulf Coast to terminals at numerous destinations in northern and western Texas (including El Paso), Oklahoma and Kansas. When complete, the system will have a combined capacity of more than 200,000 barrels per day (BPD).
Work has begun on the system with the following developments:
- Purchase of an existing 16-inch pipeline from Corsicana, to Midland, Texas, has been completed.
- TTTI and Koch Pipeline Company, L.P. and Koch Refining Company, L.P., have entered into exclusive negotiations to form a joint venture that will own the new refined products system.
- A long-term product supply agreement with Pride Companies, L.P. (Pride), in central Texas has been executed.
- Texaco Refining and Marketing Inc., also a wholly-owned subsidiary of Texaco Inc., has committed to take 25,000 to 30,000 BPD of product requirements from the system.
The backbone of the new system, which is scheduled to begin operations in January 1998, will be a 1,300 mile common carrier pipeline. Conversion of existing pipelines will provide transportation from Houston to Corsicana, Wichita Falls, Abilene, Big Springs and Midland,Texas. Proposed new pipeline construction will allow connections north to service Tulsa, Oklahoma City, and Duncan, Okla., El Dorado, Kan., Kansas City and Denver. The planned joint venture with Koch also would provide for a new 275 mile, 12-inch pipeline from Midland to El Paso. Connections to other pipelines on both the northern and western legs are anticipated.
Arthur A. Nicoletti, President of TTTI, said, "Consistent with our strategic growth objective, this project represents another significant expansion of our existing products pipeline system. It will provide economical transportation services from the Gulf Coast's large refining and import centers to various inland markets."
TTTI's existing East Houston Station will be the origin point for products from Houston area refineries and bulk terminals and, through pipeline connections, from the Port Arthur/Beaumont and Corpus Christi, Texas refining centers.
Under the supply agreement between TTTI and Pride, products will be delivered to Pride at its existing terminals at Abilene and Aledo, Texas, and possibly at additional future locations. Pride will continue to distribute these products through its existing network, including its pipeline and terminal in San Angelo, Texas. Pride CEO Brad Stephens said, "We are very pleased to obtain this long term, stable supply for Pride's existing facilities which will serve our marketing needs well into the future."
Negotiations with the Koch affiliates continue toward forming pipeline and terminal joint ventures through a combination of asset and cash contributions. "We believe this products system provides tremendous growth opportunities," said Bill Caffey, Executive Vice President for Operations for Koch Industries, Inc., parent company to Koch Refining and Koch Pipeline. "We continually pursue opportunities to expand our capabilities and better serve customer needs."
Nicoletti concluded, "We are converting existing assets to uses which will provide higher value to our customers and, consequently, to our shareholders."
Updated: June 1997