OGDEN, Utah -- Flying J Inc. has purchased 100% of the ownership interests in Longhorn Pipeline Holdings LLC, a Houston corporation and owner of the Longhorn pipeline system.
Longhorn is a refined products common carrier pipeline extending 700 miles from the Gulf Coast near Houston to El Paso, Texas, where it owns a terminal with more than 1,000,000 barrels of storage. The 18- and 20-inch diameter pipeline transports refined products to markets in west Texas and the southwestern part of the United States. This strategic pipeline, with an installed capacity [image-nocss] of more than 70,000 barrels per day, has an ultimate capacity of 225,000 barrels per day.
Flying J president and CEO J Phillip Adams said, We are very excited about the long-term potential of Longhorn. I view it as a vital piece of infrastructure enabling Gulf Coast refinery production and water-born barrels available on the Gulf Coast to reach the rapidly growing Southwest demand for motor fuels on a long-term basis. I am also very excited about the existing management team lead by Richard Rabinow, former president of ExxonMobil Pipeline Co. Rabinow and his associates have conquered a number of challenges over the last couple of years bringing the pipeline into ratable service and I commend them for their accomplishments.
Flying J, Ogden, Utah, with expected 2006 sales to exceed $15 billion, is a fully integrated oil company offering exploration and production, refining and supply, transportation and approximately 180 travel plazas in 45 states and Canada, as well as financial services and communications divisions.
Separately, Lyondell Chemical Co. has announced that it has acquired CITGO's 41.25% ownership interest in Lyondell-Citgo Refining LP in a transaction valued at approximately $2.1 billion, including CITGO's portion of the refinery's debt. Concurrently, Lyondell has negotiated a new five-year, 230,000-barrel-per-day crude oil contract with a subsidiary of Petroleos de Venezuela SA for the refinery. The new contract is based on market prices, which in recent years have been lower than those under the previous crude supply agreement.
The transaction, which will be immediately accretive, was financed using the proceeds of a seven-year Lyondell term loan.
This acquisition, coupled with a new market-based crude oil contract, unlocks the true value of this unique asset and contributes significantly to shareholder value," said Dan F. Smith, president and CEO of Lyondell. "We now will benefit fully from today's strong refining market conditions that we believe will continue into the foreseeable future."
The acquisition gives Lyondell sole ownership of the 268,000-bpd Houston refinery, which is strategically located on the U.S. Gulf Coast with access to interstate pipelines and the Port of Houston. The facility refines very heavy high-sulfur crude oil into clean fuels including reformulated gasoline and low-sulfur diesel, as well as other high- value products such as jet fuel and aromatics. It was one of the original Lyondell assets at the company's formation and, in 1993, became part of a joint venture between Lyondell and CITGO Petroleum Corp.
"The refinery generates significant cash," said Smith. "In combination with the cash generated by our global chemical businesses, this will enable significant near-term debt reduction." Prior to this transaction, Lyondell had paid down more than $2.1 billion of debt since September 2004.
With the completion of the transaction, the refining operation will become a wholly owned subsidiary of Lyondell, joining Equistar Chemicals LP and Millennium Chemicals Inc.; however, each will remain a separate legal entity.
Lyondell Chemical, Houston, Texas, is North America's third-largest independent, publicly traded chemical company. Lyondell is a global manufacturer of basic chemicals and derivatives including ethylene, propylene, titanium dioxide, styrene, polyethylene, propylene oxide and acetyls. It also is a refiner of heavy, high-sulfur crude oil and a significant producer of gasoline-blending components.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.