Calumet Specialty Products has entered into a 10-year, 20,000-bpd pipeline agreement with Plains to increase its sourcing of cost-advantaged crude oil from the Midland, Texas and/or Cushing, Oklahoma markets to its refinery in Shreveport, Louisiana,, the company announced on Wednesday.

Under the 10-year pipeline transportation agreement, Calumet will have the option of shipping up to 20,000 bpd of either (1) Midland-priced crude oil from Midland, Texas to Longview, Texas; or (2) Cushing-priced crude oil from Cushing, Oklahoma to Longview, Texas.

The new project would begin operations by early 2017.

From the Longview hub, the crude oil will be shipped to Calumet's Shreveport refinery on the Caddo Pipeline, an 80,000 bpd pipeline owned by Plains and Delek Logistics, expected to reach completion by mid-2016.

"We anticipate this agreement will provide for approximately $7.0 million to $8.0 million in annualizedfeedstock transportation cost savings beginning in 2017, subject to market conditions, as we seek to enhance crude oil slate optionality at our Shreveport refinery," said Bill Hatch, interim CEO at Calumet.