Plains All American to buy terminals for $500M
HOUSTON (AP) — Plains All American Pipeline LP said Wednesday that it will buy rail terminals used to store and transfer crude oil for $500 million to help it prepare for increased U.S. oil production.
Plains operates oil pipelines across the country. By owning the terminals, it will also give the company more control over the oil it moves and allow it to avoid paying storage costs at rented terminals.
The Houston company is buying the terminals from U.S. Development Group, a privately held company that owns crude oil, petrochemical and ethanol terminal and storage centers across the U.S. and Canada.
The deal includes three terminals in the oil country of Texas, Colorado and North Dakota, one rail unloading terminal in Louisiana and another unloading terminal that's being built near Bakersfield, Calif. Crude oil loading capacity from these terminals is expected to total about 250,000 barrels per day.
The Plains deal comes as U.S. oil production grows. Monthly crude production reached its highest level since 1998 in September, said the Energy Information Administration on Tuesday. Production is growing the fastest in Texas and North Dakota, where two of the acquired terminals are located.
The United States could overtake Saudi Arabia as the world's biggest producer of crude oil by 2020, driven by high prices and new drilling methods, the International Energy Association said last month.