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Holly Energy Partners (NYSE: HEP) announced today that it has engaged URS Corporation to perform preliminary engineering, routing and cost estimates for two proposed new pipelines.
The first proposed pipeline would be a new 20-inch intrastate crude oil pipeline between Cushing, Oklahoma and the Tulsa, Oklahoma refinery complex owned by Holly Refining & Marketing – Tulsa LLC (“HRM Tulsa”), a subsidiary of HollyFrontier Corporation. The 50-mile line would provide safe and reliable transport of Cushing sourced domestic and Canadian crude oil to HRM Tulsa’s 125,000 BPD facility. The pipeline would allow for a significant portion of crude oil transported to be heavy Canadian and sour crude oil. Crude oil processed at HRM Tulsa’s facility is currently transported on pipelines owned by Sunoco Logistics and Magellan Pipeline Company.
The second proposed pipeline would be a new 100-mile, 8-inch interstate petroleum products pipeline between the Cheyenne, Wyoming refinery owned by Frontier Refining LLC, a subsidiary of HollyFrontier Corporation, and Denver, Colorado. The Frontier Refining 52,000 BPD refinery, with its ability to process up to 35,000 BPD of heavy Canadian crude and its close proximity to growing domestic crude production, is a significant supplier of petroleum products to the Denver market. The project will also evaluate the construction of a new petroleum products terminal in North Denver or, alternatively, the routing of the new pipeline to existing third-party product terminals in the Denver area. This infrastructure addition would ensure safe and reliable transport of petroleum products from Frontier Refining’s location-advantaged refinery to its largest market. Petroleum products produced at Frontier Refining’s Cheyenne, Wyoming refinery are currently transported to Denver on the Rocky Mountain Pipeline’s products line owned by Plains All-American.
HEP anticipates that it will be in a position to decide whether to proceed with these projects in the second quarter of 2013 when preliminary engineering and detailed project cost estimates are completed and if necessary shipper commitments can be secured.