Rangeland Energy Enters into Agreement with Delek US for the Transportation of Crude Oil on Rangeland’s RIO Pipeline
- The RIO Pipeline will connect production from the Delaware Basin in Southeast New Mexico and West Texas to the market center in Midland, Texas.
- Delek US will become the RIO Pipeline’s anchor shipper.
- Delek Logistics will own a minority interest in the RIO Pipeline.
- Construction of the RIO Pipeline is expected to begin in the second quarter of 2015.
- Rangeland Energy will lead the development, construction and operation of RIO Pipeline.
Sugar Land, TX – March 20, 2015 - Rangeland Energy announced today that the company has executed a long-term agreement with a subsidiary of Delek US Holdings, Inc. (NYSE: DK) (“Delek US”) to be an anchor shipper of crude oil on the Rangeland Integrated Oil Pipeline (“RIO Pipeline”), which will connect production from the Delaware Basin to the crude oil market center in Midland, Texas. Delek Logistics Partners LP (NYSE: DKL) (“Delek Logistics”), Delek US’ logistics arm, will own 33 percent of the RIO Pipeline and supporting terminals. Delek US is a diversified downstream energy company with assets in petroleum refining, logistics and convenience store retailing.
The RIO Pipeline
Construction of the 107-mile pipeline is expected to begin in the second quarter of this year. Rangeland will also construct a terminal at each end of the pipeline. The pipeline will originate at the RIO State Line Terminal, which will serve as a crude oil gathering hub at the Texas-New Mexico border with storage tanks and truck unloading facilities. The pipeline will terminate at the RIO Midland Terminal, where there will be storage tanks and connections to various terminals and interstate pipelines to Cushing and Gulf Coast markets. Rangeland expects the pipeline and the two terminals to come into service in the first half of 2016. The RIO Pipeline will have an initial capacity of 55,000 barrels per day and an expanded capacity of 85,000 barrels per day or more, depending on the number of additional pump stations ultimately constructed.
The RIO System
The RIO Pipeline is part of the RIO System, a multipart system designed to provide crude oil producers, refiners and marketers with pipeline, rail and other logistics services to support regional production and downstream transportation of crude oil and condensate. The system’s rail facility is known as the RIO Hub and is located near Loving, New Mexico. The RIO Hub began operations in November 2014 and provides Halliburton (NYSE: HAL) and other customers with inbound frac sand services including unloading, storage and truck loading. As demand increases, the RIO Hub will also offer storage, loading and outbound rail service for crude oil. Ultimately, an additional 30-mile pipeline will connect the RIO Hub to the State Line Terminal.
“Our goal is to give great customers like Delek US the ability to effectively manage crude oil supplies by providing cost-effective transportation to points of liquidity and connectivity to multiple downstream markets,” said Rangeland President and CEO Christopher W. Keene. “We have been pleased with customer interest in the RIO System, primarily driven by the region’s production potential. Delek US is a well-respected refining and logistics company that has a strong, strategic presence in the region and is a great fit for the RIO System. The addition of an anchor shipper is a significant milestone in the ongoing expansion of the RIO System. We are excited to begin construction of the RIO Pipeline and look forward to working with Delek US to facilitate the transportation of crude oil from the Delaware Basin to its refineries and other potential markets.”
About Rangeland Energy, LLC
Headquartered in Sugar Land, Texas, Rangeland Energy was formed in 2009 to focus on developing, acquiring, owning and operating midstream assets. The company’s primary focus has been in shale producing areas experiencing rapid growth. The Rangeland team represents more than 150 years of combined midstream experience and is backed by an equity commitment from EnCap Flatrock Midstream. www.rangelandenergy.com.
About Delek Logistics Partners, LP
Delek Logistics Partners, LP, headquartered in Brentwood, Tennessee, is a growth-oriented master limited partnership formed by Delek US Holdings, Inc. (NYSE: DK) to own, operate, acquire and construct crude oil and refined products logistics and marketing assets.
About Delek US Holdings, Inc.
Delek US Holdings, Inc. is a diversified downstream energy company with assets in petroleum refining, logistics and convenience store retailing. The refining segment consists of refineries operated in Tyler, Texas, and El Dorado, Arkansas, with a combined nameplate production capacity of 140,000 barrels per day. Delek US Holdings, Inc. and its affiliates also own approximately 62 percent (including the 2 percent general partner interest) of Delek Logistics Partners, LP. Delek Logistics Partners, LP (NYSE: DKL) is a growth-oriented master limited partnership focused on owning and operating midstream energy infrastructure assets. The retail segment markets motor fuel and convenience merchandise through a network of approximately 365 company-operated convenience store locations operated under the MAPCO Express®, MAPCO Mart®, East Coast®, Fast Food and Fuel™, Favorite Markets®, Delta Express® and Discount Food Mart™ brand names.
About EnCap Flatrock Midstream
EnCap Flatrock Midstream provides value-added private equity capital to proven management teams focused on midstream infrastructure opportunities across North America. The firm was formed in 2008 by a partnership between EnCap Investments L.P. and Flatrock Energy Advisors. Based in San Antonio with offices in Oklahoma City and Houston, EnCap Flatrock is led by Managing Partners William D. Waldrip, Dennis F. Jaggi and William R. Lemmons Jr. The firm manages investment commitments of nearly $6 billion from a broad group of institutional investors. EnCap Flatrock is currently making commitments to new management teams from EFM Fund III, a $3 billion fund. www.efmidstream.com.