McGuireWoods lawyers advised
Delek Logistics Partners LP in the formation of
two joint ventures to build crude oil pipelines in Texas and Louisiana. Delek Logistics will invest approximately $91 million in the projects, which will
serve third parties and subsidiaries of Delek US Holdings Inc.
Delek Logistics and Plains All American Energy agreed on a 50-50 joint venture for the new, 80-mile Caddo Pipeline, which will originate in Longview,
Texas, and supply crude to refineries in the Shreveport, Louisiana area and through additional connections to the Delek US refinery in El Dorado, Arkansas.
Delek US expects to be an anchor shipper on the pipeline, which will carry about 80,000 barrels a day of light sweet crude oil. The $100 million project is
expected to be completed in mid-2016.
Delek Logistics also will own one-third of the RIO Pipeline, a $125 million project that will be developed with Rangeland Energy. The 107-mile pipeline
will originate in Loving County, Texas, near the New Mexico border, and terminate in Midland, Texas, where it will deliver crude to takeaway pipelines. The
RIO Pipeline will have a capacity of 55,000 barrels per day with the capability to expand to 85,000 barrels or more with additional investment. Delek
expects to be an anchor shipper on the pipeline after construction is completed in mid-2016.
“These are Delek Logistics’ first pipeline construction deals and our team was proud to handle these transactions,” said Houston-based partner David Ronn, who led the McGuireWoods team advising Delek Logistics and serves as
co-chair of the firm’s oil and gas team. “These deals once again demonstrate our firm’s range of capabilities in the MLP space.”
Headquartered in Brentwood, Tennessee, Delek Logistics is a growth-oriented master limited partnership formed by Delek US Holdings Inc. to own, operate,
acquire and construct crude oil and refined products logistics and marketing assets.
Master limited partnerships enjoyed explosive growth in the energy sector as a vehicle for accessing capital markets, but face complex governance,
securities, accounting and regulatory issues. McGuireWoods has
a cross-disciplinary team of corporate, energy and tax lawyers
who provide industry-leading advice to clients in all aspects of MLP transactions.