LONG BEACH, Calif. -- Pacific Energy Partners LP said that one of its subsidiaries has signed an agreement to acquire certain terminal and pipeline assets from subsidiaries of Valero LP.
The total purchase price of the assets is $455 million. The transaction is subject to the receipt of regulatory approvals and is expected to close within the next 90 days. Valero is required to divest these assets pursuant to an order from the Federal Trade Commission (FTC) in connection with its acquisition of the Kaneb group of companies.
"The [image-nocss] acquisition of these premium assets enhances Pacific's asset class and geographic diversity and further strengthens our focus on stable, fee-based assets with no direct commodity price exposure," said Irv Toole, president and CEO of Long Beach, Calif.-based Pacific Energy. "These assets are in growing markets, provide diversification into refined products service, which has been one of Pacific's growth objectives and have significant near term expansion opportunities. Pacific's management team has substantial experience operating refined products assets, and we are confident we can promptly and efficiently integrate these assets with Pacific's existing operations."
The terminals and pipeline system include:
West Coast Terminals in the San Francisco area: The Martinez Terminal and the Richmond Terminal, which have 4.1 million barrels of combined storage capacity, are located on approximately 147 acres of company-owned land, providing room for additional tankage. These terminals have marine, pipeline and rail access. East Coast Terminals in the Philadelphia area: The North Philadelphia Terminal, the South Philadelphia Terminal and the Paulsboro, New Jersey Terminal, which have a combined storage capacity of 3.2 million barrels, are located on 102 acres of company-owned land, also providing room for additional tankage. These terminals have marine and pipeline access. West Pipeline System in the U.S. Rocky Mountains: This system consists of 550 miles of refined products pipeline extending from Casper, Wyoming east to Rapid City, South Dakota and south to Colorado Springs, Colorado. Also, there are products terminals at Rapid City, South Dakota, Cheyenne, Wyoming and Denver and Colorado Springs, Colorado with a combined storage capacity of 1.7 million barrels.In other supply infrastructure news, an upgrade of a Kinder Morgan gasoline pipeline that ruptured almost two years ago near Tucson, Ariz., and brings fuel from Texas to the Valley should be complete by next summer and increase its capacity by 80%, officials said, according to a report by The East Valley Tribune.
Arizona Corporation Commission Chairman Jeff Hatch-Miller told the newspaper that the upgrade to the line will lessen the Valley's dependence on California fuel, which is typically more expensive than that refined in Texas, and increase the region's overall fuel supply. The Valley gets the majority of its gasoline through an underground line from California, while about a third is delivered to the Valley through the El Paso line, the report said.
The pipeline runs from El Paso through Tucson and into the Valley. It is the same one that ruptured July 30, 2003, interrupting deliveries of gasoline and causing fuel shortages, long lines at gas stations and higher pump prices across the region.
Hatch-Miller said the upgrade will increase pipe diameters and will increase the daily amount of fuel delivered to Tucson by 56%, from 90,000 barrels to 147,000 barrels, he added. In Phoenix, it's increasing from 49,000 barrels to 99,000 barrels, so we're doubling the amount of fuel that's coming into the Valley from the East.
Tom Rex, an Arizona State University economist, told the paper that the increased supply of fuel will be an improvement, but may not result in lower prices at the pump. If we had a gas shortage here, it would lower the price. But we don't really have a shortage, he said. Still, the increase in the amount of fuel delivered from Texas will absolutely help if there's a supply problem coming out of California, he said.
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