San Antonio Refinery — Eagle Ford Shale News

TexStar Midstream has signed an agreement with Calumet Specialty Products Partners to construct, own, and operate a 30,000 b/d pipeline system that will deliver Eagle Ford crude to Calumet's San Antonio Refinery.

The deal includes a 15-year agreement for TexStar to build and operate the Karnes North Pipeline System (KNPS). The system will include 50-miles of 8-inch pipe from Karnes to the southeast side of San Antonio.

Also Read:NuStar Buying Eagle Ford Midstream Assets - Selling San Antonio Refinery to Calumet

Calumet expects its refinery in Elmendor, TX, will receive deliveries of at least 10,000 b/d, with the potential for more. The company's San Antonio Refinery has capacity to process 14,500 b/d. Capacity is expected to grow to 17,500 b/d soon. The company spent $9 million to increase production of jet fuel, diesel, and gasoline.

“We expect this agreement will help to further improve the long-term profitability of our San Antonio refinery,” stated Jennifer Straumins, COO of Calumet. “By year-end 2014, the refinery will begin receiving significant volumes of Eagle Ford crude oil via the TexStar line, thereby enabling us to realize significant transportation cost savings on our delivered feedstock.”

The Calumet refinery produces ultra-low sulfur diesel, jet fuel, and specialty solvents.

Currently, crude oil is delivered by truck and Calumet expects the pipeline to significantly reduce the cost of delivered oil.

Read the full press release at calumetspecialty.com

NuStar Energy has agreed to buy Eagle Ford midstream assets from TexStar Midstream for $425 million. The deal will be completed in two pieces - crude oil assets then NGL assets.The crude oil system moves through La Salle, Frio, and Live Oak counties moving 60,000 b/d, with the potential to move as much as 100,000 b/d.

NuStar will also sell its San Antonio refinery and associated terminal in Elmnedorf, TX. The refinery refines a little more than 14,000 b/d of crude and is being sold as part of the company's strategy to move away from margin based businesses. NuStar has approximately $90 million invested in the refinery to date.

“The TexStar acquisition and refinery divestiture are the next critical steps in our strategic redirection of NuStar away from the margin-based refining and marketing business in order to further grow our fee-based pipeline and storage operations through internal growth projects and acquisitions,” said NuStar President and CEO Curt Anastasio. “NuStar was actually the first company to move Eagle Ford crude by pipeline, and we are fortunate to have extensive pipeline and terminal assets already in operation throughout the Eagle Ford region.

NuStar see's a very bright investment climate in South Texas. The company stated there are more high return opportunities in fee based transportation and storage projects than they have ever had in the history of the company. Expect to hear more from NuStar as the company builds additional pipelines in infrastructure in the region.