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Oiltanking Partners, L.P., has announced that the board of directors of its general partner has approved expansion projects to construct two new crude oil pipelines in the Houston Ship Channel and approximately one million barrels of new crude oil storage capacity at the partnership’s Oiltanking Houston terminaling facility. The $80-85 million project is the first phase of anticipated infrastructure and storage capital expenditures to address additional customer demand at Oiltanking Houston.

The project includes the following:

- Reversal of an existing 24” pipeline that currently originates from Oiltanking Houston to multiple Houston Ship Channel refineries;

- Extension of the reversed 24” pipeline to connect to Genoa junction, located on the south side of the Houston Ship Channel;

- Construction of a new 30” pipeline from Oiltanking Houston along the Houston Ship Channel to the area refineries previously served by the 24” pipeline; and

- Construction of one million barrels of crude oil storage at Oiltanking’s Houston terminaling facility.

Due to the expansion of crude oil supplies in the U.S. from domestic shale plays and Canadian oil sands, additional long haul pipeline systems are either in development or under construction to transport crude oil to the Houston market and supply the Gulf Coast refineries. Additionally, other pipelines are being built or reversed to deliver crude oil from Cushing and West Texas to the Gulf Coast refineries and to alleviate the current over-supply situation in Cushing, Oklahoma.

The new project provides connectivity to Genoa junction and has been designed to accommodate additional customer throughput volumes as growing crude oil supplies reach the Houston Ship Channel market. In addition, Oiltanking says it is poised to construct additional crude storage tankage to support the rising customer demand at Oiltanking Houston.

Carlin G. Conner, President, CEO and Chairman of the Board, stated, “Over the last three decades Oiltanking Houston has built a premier crude oil distribution center by investing in pipeline connectivity, expansive deep waterfront, and substantial crude tankage.

“In anticipation of these new crude supplies being delivered to the Houston market, we are expanding and strengthening the premier crude oil distribution system in the Houston Ship Channel by connecting to these pipeline junctions and building additional tankage. Interest from both existing customers and new customers, including refiners, producers and marketers, reaffirms our expectation of strong increases in demand for new crude capacity.

“In addition to the expansion projects currently approved, we foresee additional tank expansion opportunities developing with the dramatic shift in crude oil logistics. As appropriate, we will prudently evaluate these opportunites in the future with the goal of increasing our distribution to unit-holders over time. By connecting to the planned inbound flows of new crude sources, along with our superior waterfront and premier distribution systems, we believe Oiltanking Houston will be well positioned for continued growth,” concluded Conner.

Oiltanking says it has obtained the required environmental and internal approvals to commence construction and expects to complete construction of the pipelines and the approximately one million barrels of new crude oil storage capacity during the first quarter of 2013.

The new storage capacity is in addition to the one million barrels of crude storage currently being constructed at the Houston terminaling facility. Once complete, the expansion will bring Oiltanking's total active storage capacity across all products to approximately 18.8 million barrels.