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Plains buys Yorktown fuel terminal, Eagle Ford pipeline

01 Dec 2011 17:05 GMT

Houston, 1 December (Argus) — Plains All American Pipeline has acquired Western Refining's 6.6mn bl crude and product storage facility in Yorktown, Virginia, along with pipelines in Texas, trucking assets and BP's Canadian NGL division.

The Yorktown terminal deal includes a deepwater port, truck and rail facilities and an LPG storage and distribution terminal. The facility is on the site of Western's shuttered 65,000 b/d Yorktown refinery. The terminal can handle crude, refined products, propane, butane, ethanol and biodiesels.

Over the next 18-24 months Plains will disassemble and sell surplus equipment at the site and also “enhance connectivity and performance” of the terminal, which is a receipt point for the Colonial products pipeline.

The US Atlantic coast refining picture is changing radically, with ConocoPhillips shutting its Trainer, Pennsylvania, refinery this fall, and Sunoco saying it will sell or shut its two refineries in that state by mid-2012. Market players have said there are indications those Sunoco facilities could go off line even sooner.

Poor economics of the primarily light, sweet crude running refineries on the east coast have brought about the shut downs, which have in turned been a boon to pipelines and terminals in the area. Imports of gasoline, diesel and other refined products from overseas – as well as pipeline movements of fuel up from US Gulf coast refineries – has ramped up and shows no signs of stopping.

In addition to the Yorktown deal, Plains is also buying from Western an 82-mile, 16-inch 100,000 b/d crude pipeline segment and associated connections and tankage in New Mexico. The line will carry crude from southeastern New Mexico, where drilling activity is increasing, to Jal, New Mexico, where the company's Basin oil pipeline originates. The Basin line carries crude from the Permian basin in New Mexico and Texas to Cushing, Oklahoma.

In a flurry of other deals announced today, Plains said it has acquired a 120-mile crude and condensate gathering system serving the Eagle Ford shale play in south Texas from Velocity Midstream Partners. That system is currently under advanced stages of construction and will the capacity to carry 150,000 b/d – expandable to 185,000 b/d – and 185,000 bl of condensate storage at Catarina and Gardendale, Texas.

Infrastructure has been tight in shale plays such as the Eagle Ford, where drilling has dramatically increased as high crude and liquids prices, as well as new oil field technologies, have fueled a condensate and crude production boom.

The Eagle Ford system has long-term acreage dedications and volume commitments from several large producers in the resource play, Plains said. Construction should be completed in the next 18 to 24 months, and the system extended to other condensate and crude portion of the Eagle Ford. Plains will also add 150,000-250,000 bl of capacity at its Gardendale terminal, which is the receipt point for the Eagle Ford pipeline.

And Plains is buying BP's Canadian NGL business for $1.67bn in cash. In October it also closed on the purchase of a small trucking operation in Canada.

The company also has been trying to take over midstream operator SemGroup since last year, and went public with its $24 per share offer last week. SemGroup has repeatedly rejected Plains bid.

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