Buckeye Partners Closes Deal for Eagle Ford Assets

September 17, 2014 Kirk Eggleston

Trafigura Terminals Eagle Ford Port in Corpus Christi

Buckeye Partners, L.P. has closed its $860-million transaction with Trafigura AG's South Texas Eagle Ford midstream assets.

The transaction creates a new joint venture - Buckeye Texas Partners. The new company will own and operate the divested Trafigura assets, but Trafigura will retain a 20% interest and have joint ownership of the new company. Both companies announced the acquisition and divestiture agreement earlier this month.

Buckeye Texas Partners will invest appoximately $240-million – $270-million on improvements to the system, increasing its liquid petroleum products storage capacity to 5.6-million barrels. A 50,000 barrel per day condensate splitter is currently under construction and is anticipated to be completed by mid-2015.

“Once the initial phase of expansion is complete, these assets will form an integrated system with connectivity from the production in the field to the marine terminal infrastructure in Corpus Christi, creating a logistics platform with significant flexibility and optionality.”

— Buckeye Partners CEO, Clark Smith

Buckeye Buys Eagle Ford Facilities - $860 Million

September 3, 2014 Kirk Eggleston

Buckeye Partners, L.P. announced this week it will acquire an 80% interest in Trafigura AG's South Texas Eagle Ford midstream assets for $860-million. The deal creates a new joint venture, whereby Trafigura will retain a 20% interest in its assets and jointly own the new company, Buckeye Texas Partners, that will own and operate the assets divested by Trafigura.

In the deal, Buckeye gains a deep-water, high volume marine terminal located on the Corpus Christi Ship Channel, a condensate splitter and LPG storage complex in Corpus Christi, and three crude oil and condensate gathering facilities in the Eagle Ford shale. All of the assets are supported by 7- to 10-year minimum volume throughput, storage and tolling agreements with Trafigura.

“We are excited about the opportunity to partner with Trafigura and to position ourselves with them in the rapidly growing Corpus Christi and Eagle Ford markets,” stated Mr. Smith. “We believe this strategic partnership will provide significant opportunities for additional infrastructure expansion to support further expected growth in these markets.”

— Buckeye CEO, Clark Smith

Buckeye Texas Partners will invest appoximately $240-million - $270-million on improvements to the system, increasing its liquid petroleum products storage capacity to 5.6-million barrels. A 50,000 barrel per day condensate splitter is currently under construction and is anticipated to be completed by mid-2015.

Magellan Midstream Partners Will Spend $250 Million on Condensate Splitter

April 1, 2014 Kirk Eggleston

Magellan Midstream Partners announced in late March plans to build a condensate splitter and make infrastructure improvements to its' Corpus Christi terminal for $250 million. According to company officials, the splitter will be able to process 50,000 b/d of condensate, supported by a long-term commitment from commodities trader Trafigura AG.

“This agreement will provide another outlet for producers of domestic crude and condensate. We believe Corpus Christi is advantaged over other locations and these investments, along with our other assets in the area, are critical to providing long-term solutions for the producers.”

— Jeff Kopp, Trafigura AG’s director of North America oil trading.

The need for improved midstream and downstream infrastructure is growing to meet the demands of condensate production in the Eagle Ford. In 2013, the Texas Railroad Commission reported an average of 207,183 b/d of condensate from the play. In January of 2014, condensate production alone was 178,778. That's up drastically from 2011 and 2010 when condensate production was only 80,464 b/d and 18,784 respectively.

“Our Corpus Christi terminal is ideally situated to receive condensate from the Eagle Ford shale, including shipments via our Double Eagle pipeline joint venture, and to offer flexible services and a variety of market options for our customer.”

— Michael Mears, Magellan’s chief executive officer.

The project also includes construction of more than one million barrels of storage, dock improvements and two additional truck rack bays at Magellan’s terminal. Magellan pipeline connectivity between Magellan’s terminal and Trafigura AG’s nearby facility.

Magellan company officials anticipate the new splitter and infrastructure improvements to be operational during the second half of 2016.