Diamond Pipeline Gets Green Light From PSC To Begin Work On $900 Million Project

Credit Diamond Pipeline LLC

One week after getting the go ahead to begin work on a 440-mile crude oil pipeline across the heart of Arkansas, Diamond Pipeline officials said Tuesday they still expect to begin construction by year’s end and begin hiring the hundreds of workers needed to complete the project.

Karen Rugaard, spokeswoman for Houston-based Diamond Pipeline LLC, said right-of-way clearing and construction for the $900 million project will begin in the fourth quarter and the pipeline is expected to be complete in late 2017.

In response to a query from Talk Business & Politics concerning the timetable for workers to be employed during once the project gets underway, Rugaard said “hiring for the construction of the Diamond Pipeline will be handled by our contractors on an ongoing basis.”

During construction, the pipeline will support an estimated 1,500 temporary and 15 permanent jobs as well as approximately $11 million in additional tax revenue to communities along the route, company officials said.

On Aug. 31, Arkansas Public Service Commission (PSC) Administrative Law Judge Susan D’Auteuil issued an order saying that Diamond Pipeline had met the statutory requirements for state regulators to grant the Texas company the right to build the controversial pipeline. Diamond Pipeline – a joint venture between Houston-based pipeline giant Plains All American and the nation’s largest refiner, Valero Corp. – will eventually deliver U.S. benchmark West Texas Intermediate crude from Plains’ facility in Cushing, Okla., across Arkansas to Valero’s 195,000-barrel per day refinery in Memphis.

Judge D’Auteuil’s order came less than two weeks after the commission held a 15-minute evidentiary hearing on Aug. 18 to consider a June application by the Texas joint venture to construct the pipeline across the Arkansas River in Franklin County; the Illinois Bayou in Pope County; the White River in Prairie County; the Saint Francis River in Arkansas County; and the Mississippi River in Crittenden County.

In the brief PSC proceedings, Diamond Pipeline officials entered testimony electronically from company engineer Stephen Lee stressing that the pipeline would not pose a “public safety threat” or contaminate the water supply if there was an oil spill. The PSC staff also entered similar supporting electronic testimony from Robert Henry, the PSC chief of pipeline safety, that the project will not jeopardize public safety or result in “an unlawful paramount public or private use of the navigable waterway or its underlying bed at the point of the proposed crossing.”

Attorneys for Clarksville Water & Light Co. withdrew testimony in opposition of the project as part of an agreement reached on Wednesday with Diamond Pipeline officials to drop the case in return for a $6.6 million escrow fund to build a water treatment facility to protect the Johnson County community’s water supply.

In her five-page order, D’Auteuil said it appears that under state law, the U.S Corps of Engineers had jurisdiction to approve construction of the project. The PSC judge said state regulators could only consider whether the project would jeopardize the public safety or result in an unlawful interference on the narrow issue of public or private use.

Concerning Diamond Pipeline’s application, Judge D’Auteuil said there was no evidence presented in the August hearing that the company would violate any Arkansas laws in constructing the multistate energy development.

To date, Diamond has contracted Little Rock-based Welspun Tubular to manufacture two-thirds of the pipe needed to construct the 440-mile pipeline at a cost of $47 million. Construction on the pipeline will begin in central Oklahoma halfway between Oklahoma City and Tulsa and work its way eastward across the stateline into Sebastian County.

The winding pipeline route across Arkansas is expected to touch at least 17 counties before exiting the state in Crittenden County and crossing the Mississippi River into the Memphis area.