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Last Man Standing - BridgeTex On Track to Be the Last Permian-to-Houston Pipe to Fill Up

Permian producers have enjoyed an abundance of outbound options since the pandemic, with egress capacity surpassing production. While a significant amount of capacity remains available, not all routes have proven equal in the eyes of the market, with Corpus Christi and Houston the most sought-after destinations for Permian crude. In today’s RBN blog, we’ll explore why ONEOK’s BridgeTex Pipeline is the only conduit serving the Houston market that still has room to take on additional volumes — although it appears to be quickly nearing full capacity. 

Before diving into the details, it’s helpful to know the history of BridgeTex Pipeline ownership. BridgeTex, which came online in Q3 2014, was built by Magellan Midstream and Occidental Petroleum (Oxy), each holding a 50% stake. In 2014, Oxy sold its share to Plains All American for approximately $1.1 billion. (At that time, Magellan acquired BridgeTex’s tanks at the East Houston Terminal and the pipeline between East Houston and Texas City and integrated those assets with its existing crude oil system.) Four years later, in 2018, the Ontario Municipal Employees Retirement System (OMERS) — the defined benefit pension plan for municipal employees in Canada’s most populous province — acquired a 50% interest in the pipeline for around $1.4 billion, with Magellan maintaining a 30% interest and Plains with 20%. The transaction allowed Plains and Magellan to sell a portion of their pipeline at what seemed to be the top of the market, while OMERS was able to acquire a portion of a very attractive asset originating from the most lucrative production area in the U.S., providing strong cash flow for the foreseeable future. As covered in Tulsa Time, ONEOK acquired Magellan in 2023 in a transaction valued at $18.8 billion. This deal included numerous assets, among them Magellan’s Colorado City, TX, hub and its 30% interest in BridgeTex Pipeline.

When BridgeTex was originally marketed, and ultimately launched its open season, there were two types of commitments being contemplated: a regular committed shipper and a firm-space shipper. The key difference was that a regular committed shipper could have its volumes allocated down by other regular shippers but a firm-space shipper could not. Another important difference was that regular committed shippers enjoyed a rate lower than the walk-up tariff, while firm-space shippers were obligated to pay more.

BridgeTex came online at 300 Mb/d with a Colorado City origin and destinations in Houston and Texas City. The pipeline had both a Federal Energy Regulatory Commission (FERC) tariff for those customers making an interstate movement (i.e., crude oil originating in New Mexico) and a Texas Railroad Commission (RRC) tariff for those customers making an intrastate movement. In 2017, BridgeTex created a new origin point at Bryan, TX, in the middle of the Eaglebine production area (about 100 miles northwest of Houston). Then, in 2017, due to continued growth in the Permian Basin, BridgeTex expanded again to an ultimate capacity of 440 Mb/d. In addition to the added capacity, BridgeTex offered a new origin of Midland (via a lease from Plains). This expansion was done under a new tariff structure, with that capacity managed separately from the original BridgeTex space. As such, BridgeTex II was born.

BridgeTex Pipeline Connectivity

Figure 1. BridgeTex Pipeline Connectivity. Source: RBN 

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