(Adds Rover and Mariner East pipelines)
NEW YORK, May 10 (Reuters) - Energy Transfer Partners said on Thursday it plans to build a crude pipeline from the Permian basin in Texas to the Houston Ship Channel and Nederland, Texas, which will have an initial capacity of up to 600,000 barrels per day (bpd).
The pipeline will be “easily expandable” to 1 million bpd, in order to serve growing export markets at coastal ports, the company said during a first quarter earnings conference call. It is likely to come online by 2020.
Surging crude output from the Permian basin, the biggest oilfield in the United States and the source of most of the country’s shale crude, is straining the region’s infrastructure. Pipelines are running full, sending crude prices there WTC-WTM WTC-WTS to their weakest level against benchmark futures in three and a half years.
“The almost historical widening of that basis will certainly help our margins in the coming quarters,” said Marshall McCrea, a senior ETP executive.
ETP also said volumes on its Permian Express 3 crude pipeline averaged about “a couple of hundred thousand” bpd in the first quarter. The company said it would continue to evaluate further expansions for that pipeline.
Separately, ETP said it plans to ask U.S. federal energy regulators for permission to put the full Rover natural gas pipeline in service by June 1.
The $4.2 billion project is designed to carry up to 3.25 billion cubic feet per day (bcfd) of gas from the Marcellus and Utica shale fields in Pennsylvania, Ohio and West Virginia to the U.S. Midwest and Gulf Coast and Ontario in Canada.
ETP has also delayed the planned startup of its Mariner East 2 liquids pipeline in Pennsylvania to the third quarter from the second quarter, but that delay was not expected to have a material impact on the project’s cost. A planned expansion, known as Mariner East 2X, is expected by the middle of 2019.
The $2.5 billion Mariner East 2 project will boost total capacity of the Mariner East project to 345,000 bpd from an existing 70,000 bpd and open the pipe to suppliers in Ohio and West Virginia. Mariner East 2X will add another 250,000 bpd to the project.
ETP also said its 1.4-bcfd Red Bluff gas pipe in the Permian shale will enter service later this month.
Reporting by Devika Krishna Kumar and Scott DiSavino in New York; Editing by Bernadette Baum