The U.S. Department of Energy has signed a contract leasing two pipelines from its Bryan Mound, Tex., Strategic Petroleum Reserve site to Exxon Pipeline Co.
A 40-in., 46-mile line extends to the ARCO Pipeline Co. tank farm at Texas City, and a 30-in., 4-mile pipeline extends to the nearby Jones Creek tank farm.
DOE said the deal could bring in $25 million to the U.S. Treasury over 15 years. The contract has a provision for allowing the lease fees to be paid in crude that would be added to the SPR's 561 million bbl inventory. And because Exxon will assume operation of the lines, DOE will save more than $300,000/year in pipeline maintenance fees.
The pipelines will give Exxon capacity to connect other new and existing pipelines to bring production from oil fields in the Gulf of Mexico to refining centers in the Texas Gulf Coast and Midwest regions.
The Exxon lease is expected to begin on or before July 1, 2000, and continue for a minimum of 10 years with options for additional 5-year extensions.
Meanwhile, DOE signed a 6-month contract to lease the SPR pipelines to Seaway Pipeline Co., operated by ARCO Pipeline Co. ARCO will use the pipelines while it refurbishes some tanks at the Jones Creek farm.
Under both leases, DOE retains priority use of the pipelines in the event a national emergency requires SPR crude to be withdrawn. It also can use the lines to conduct yearly tests of the SPR's distribution capability.
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