One Step Closer - Augustus Crude Pipeline Advances Lotus Midstream's Broader Permian Plan

The new, large-diameter crude oil pipelines coming online between the Permian Basin and the Gulf Coast grab all the headlines. They wouldn’t be nearly as valuable to producers, however, if it weren’t for a number of other, smaller projects being developed in West Texas to transport large volumes of crude from major gathering systems and storage hubs to these new takeaway pipelines. A case in point is Lotus Midstream’s recently unveiled Augustus Pipeline project, which will use a combination of new and existing pipe to initially transport up to 150 Mb/d of West Texas Intermediate (WTI), West Texas Light (WTL) and West Texas Sour (WTS) from Midland to Crane. When Augustus starts flowing late this year, crude delivered to the Crane hub could flow into the Longhorn Pipeline to Houston, or maybe the EPIC Crude or Gray Oak pipelines to Corpus Christi. Today, we discuss Lotus’s planned Midland-to-Crane project, and its significance for Midland Basin producers and the pipe’s owner/developer.

The last words uttered by Augustus, the adopted son and heir of Julius Caesar and the first emperor of the Roman Empire, were that he “found Rome of clay, and leave her to you of marble.” In other words, in his reign of 40-plus years, the guy really took the empire and its capital city up a notch. Lotus Midstream’s ambitions may not be quite as grand as Augustus’s, but in only a couple of years the company has acquired the Centurion pipeline system from Occidental Petroleum (Oxy), taken a minority ownership interest in ExxonMobil’s 1-MMb/d-plus Wink-to-Webster Pipeline (W2W), and lined up shipper commitments for what will be the 150-Mb/d Augustus Pipeline between the Midland and Crane crude hubs. (Other projects — including adding more crude oil storage at its Midland Terminal and making one of Centurion’s two takeaway pipelines from the Permian to Cushing bidirectional — are in development, as we’ll get to in a moment.)

In our Lotus Flower(s) blog a few months ago, we said that in mid-2018, while Lotus Midstream was working toward becoming a partner in W2W (dashed green line in Figure 1) — and pursuing the possible development or acquisition of crude oil gathering systems to feed that planned takeaway pipe — the opportunity arose to acquire Oxy’s Centurion pipeline system, and Lotus jumped on it. Centurion — named for the Roman military officers, by the way — is best-known for its two 16-inch-diameter takeaway pipelines (light-blue lines), which together can transport as much as 300 Mb/d to Cushing with the addition of drag-reducing agents. The upstream ends of the Centurion takeaway pipeline reach deep into both the Permian’s Midland and Delaware basins. In addition to transmission/takeaway pipelines, Centurion has an extensive network of about 1,000 miles of active crude gathering pipes (dark-blue lines), many of them in the most productive parts of the Midland Basin. These smaller-diameter pipelines gather WTI, WTS and other crude from multiple producers.