NEW YORKNEW YORK (Reuters) - Plains All American Pipeline LP said on Tuesday the expanded Sunrise Pipeline oil system from the Permian to Cushing, Oklahoma, was placed into service this month, offering much-needed relief from transportation constraints in the basin.
Volumes on the expanded line are currently at about 300,000-350,000 barrels per day (bpd), higher than the company's previous estimate of about 200,000-250,000 bpd, a company executive said during an earnings call.
The Sunrise extension can ultimately transport about 500,000 bpd of crude from Midland to Colorado City and Wichita Falls, Texas, and provides connections to Cushing, the delivery point for U.S. crude futures.
Last month, Plains established rates for the newly expanded Sunrise system from Loving County and Midland County, Texas, to Cushing.
The start-up of the line has helped regional crude prices in Midland, Texas, recover from the weakest levels in more than four years.
Record-breaking production from the Permian basin, the largest U.S. oilpatch, has outpaced pipeline takeaway capacity, prompting several new projects and expansions.
"By bringing Sunrise into service early, we were able to add much needed capacity into the market," Chief Executive Willie Chiang said.
Plains said it expects significant year-over-year Permian tariff volume growth.
A portion of the Cactus II line from Wink to McCamey, Texas, is expected to come into service by late this year or early next year, Plains said. Full service on the 670,000 bpd line from the Permian basin to Corpus Christi is targeted for April 2020.
The company also said owners of the Capline Pipeline are advancing plans to reverse the system, the nation's largest crude pipeline that currently runs from the Gulf Coast to key refineries in the Midwest.
It is likely to be an 18-24 month process that will occur in phases, an executive said, adding that the south end of the line from Memphis, Tennessee, to the Gulf Coast will probably come on first.
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 pushed inland crude to the East Coast and Gulf Coast.
Plains also said it was monitoring demand for building a crude export facility capable of handling supertankers.
Several midstream companies have announced multimillion-dollar crude terminals along the Gulf Coast looking to take advantage of surging U.S. crude exports.
"We'll watch and see what happens," Chiang said.
(Reporting by Devika Krishna Kumar in New York; Editing by Tom Brown)