CHICAGO & HOUSTON -- BP Products North America Inc. recently announced that it will create a new jointly owned company with Kinder Morgan Inc., North America’s biggest energy infrastructure firm, to operate fuel storage terminals across the country.
Under the agreement, BP will sell 15 of its U.S. terminals to Kinder Morgan, which will operate 14 of them through a new limited-liability company. Kinder Morgan will solely own the remaining terminal. BP, meanwhile, will obtain a 25% ownership stake in the newly formed company, continuing to use the terminals as key distribution hubs for BP gasoline and its other refined products to gas stations and convenience stores.
The companies said they expect the transaction, valued at approximately $350 million, to be finalized by early next year, pending regulatory approvals.
“We believe this deal is a win for both companies,” said Doug Sparkman, BP’s chief operating officer of fuels for North America. “It enables BP to maintain strategic access to terminals nationwide, while reducing operating costs and complexity. It also brings in a world-class company to manage the terminals, ensuring that our customers continue receiving excellent service.”
“We are excited to be partnering with BP on this joint venture,” said John Schlosser, president of Kinder Morgan Terminals. “By combining BP’s expertise in product trading and marketing with Kinder Morgan’s strength in operations and terminal development, the JV is well suited for growth opportunities in high-demand refined petroleum products markets. We believe this arrangement benefits BP, Kinder Morgan and third-party customers.”
Earlier this year, BP’s U.S. Pipelines & Logistics business decided to centralize operations and sell select fuel storage terminals in the U.S. After an extensive internal review, the business concluded that forming a limited liability company with Kinder Morgan was an attractive way to pursue strategic growth, while also streamlining the business.
The new limited liability company will oversee fuel terminals in the Midwest, Northeast, Southeast and on the West Coast.
The transactions with Kinder Morgan do not include all of BP’s U.S. fuel storage terminals. BP still has terminals in Whiting, Ind.; Dubuque, Iowa; Portland, Ore.; Seattle, Wash.; and Port Newark, N.J.
Kinder Morgan, Houston, is the largest energy infrastructure company in North America. It owns an interest in or operates approximately 84,000 miles of pipelines and 165 terminals. The company’s pipelines transport natural gas, gasoline, crude oil, CO2 and other products and its terminals store petroleum products and chemicals, and handle bulk materials like coal and petroleum coke. Kinder Morgan is the largest midstream and third largest energy company in North America.
London-based BP is the single, global brand formed by the combination of the former British Petroleum, Amoco, Atlantic Richfield (ARCO) and Burmah Castrol. BP is a global producer, manufacturer and marketer of oil, gas, chemicals and renewable energy sources.
With U.S. headquarters in La Palma, Calif. (West), and Warrenville, Ill. (East), BP markets more than 15 billion gallons of gasoline every year to U.S. consumers through more than 11,000 BP- and ARCO-branded retail outlets and supplies more than four billion gallons of fuel annually to fleets, industrial users, auto and truck manufacturers, railroads and utilities.
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