The firm plans to expand the capacity of its Cameron Highway Oil Pipeline System (CHOPS) and construct a new 105-mile pipeline, known as SYNC, to connect one of its existing developments.
Extending along the Outer Continental Shelf (OCS) of the Gulf of Mexico, the 380-mile CHOPS pipeline delivers crude oil from major deepwater oil fields to markets on the Texas Gulf Coast.
In a press statement, Genesis said: “Both of these developments include life-of-lease dedications to our assets. Additionally, they both include long term take-or-pay arrangements that represent a less than five times build multiple on a combined basis, which multiple could be less than four times if the producers hit just 75% of their expected production profiles.”
The decision follows the signing of agreements by the company to transport the crude oil from two deepwater developments that have a combined production capacity of approximately 160,000 barrels of oil per day, Genesis Energy CEO Grant Sims said.
Production from the two deepwater developments is planned to start in late 2024 or 2025, Sims added.
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Sims was cited by Reuters as saying, during a conference call, that Genesis is also in early talks with undisclosed operators for the incremental production of nearly 150,000 barrels per day.
These operators would consider accessing a portion of capacity from the company’s new pipeline, effective from as early as 2024.
Genesis agreed to offload its idled offshore Independence Hub platform to an undisclosed firm for gross proceeds of $40m.