Holly, Centurion agree to West Texas pipeline reversal

Holly R&M Co. has entered into a definitive agreement to ship oil on the Centurion pipeline, operated by an Oxy subsidiary, to supply its Navajo Refining refinery in New Mexico.

Christopher E. Smith
Pipeline Editor

HOUSTON, July 23 -- Holly Refining & Marketing Co., Dallas, has entered into a definitive agreement to ship crude oil on the Centurion pipeline, operated by a subsidiary of Occidental Petroluem Corp., to supply its Navajo Refining Co. LP refinery in New Mexico. Centurion has a 16-in. OD and is 375 miles long.

The agreement follows a 30-day open season held by Centurion starting Apr. 14 to determine interest in reversing the pipeline, which had been running from West Texas to Cushing, Okla. (OGJ Online, Apr. 25, 2008). The line to be reversed, known as the No. 1 Pipeline, is one of two 16-in. lines Centurion operates between Slaughter, Tex., and Cushing.

The No. 1 line will now deliver crude from Cushing to Slaughter, near the Texas-New Mexico border. Holly said it will build a 70-mile pipeline between Slaughter and Navajo and is considering both its physical properties and whether the line will be built by Holly Refining & Marketing or Holly Energy Partners. Holly has shipping commitments in place on TransCanada's Keystone and Enbridge's Spearhead pipeline to transport heavy crude from Canada to Cushing. Holly hopes to have both the reversed pipeline and the 70-mile line in service as early as fourth-quarter 2009, with a projected capacity of 60,000 b/sd.

Holly is implementing capital improvement projects on the Navajo refinery to increase its feedstock flexibility with an eye toward processing as much as 40,000 b/sd of heavier Canadian crudes. These projects are expected to be completed in fourth-quarter 2009. Holly is also expanding Navajo's overall capacity to 100,000 b/sd from 85,000 b/sd and expects this work to be mechanically complete by first-quarter 2009.

Contact Christopher E. Smith at chriss@ojgonline.com.

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