Buckeye Partners Closes Deal for Eagle Ford Assets

Trafigura Terminals Eagle Ford Port in Corpus Christi
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.

Read more: Buckeye Buys Eagle Ford Facilities - $860 Million

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

Read more at buckeye.com

EPA Grants Permit for $500 Million Corpus Christi Condensate Splitter

Oil Tanker Leaving Port of Corpus Christi
Oil Tanker Leaving Port of Corpus Christi

The Environmental Protection Agency (EPA) has given a subsidiary of Conneticut-based Castleton Commodities International the green light for the construction of new petroleum process facilities near Corpus Christi, TX. The EPA issued the final greenhouse gas and prevention of significant deterioration construction permit to the subsidiary, CCI Corpus Christi, LLC, on Sept. 15th.

The company plans to build two fractionation units, capable of producing a combined 100,000 b/d and a bulk petroleum terminal. The terminal will include storage tanks and barge loading operations that can handle 500,000 barrels a day of crude condensate for export.

Castleton hopes to get some skin in the condensate export game, according to the EPA, but will need additional approval from the federal government. So far, only two companies, Pioneer Natural Resources Co. and Enterprise Product Partners LP, have been authorized to export minimally processed condensate from the Eagle Ford Shale. More than half of all production from play is condensate, which is an ultralight crude oil.

Read more: Oil Exports to Foreign Buyers Begins

In addition to exporting product, Castleton also plans to use the crude condensate to produce diesel, jet fuel, naphtha, and other petroleum products. The project is expected to cost the company $500-million.

Read more at epa.gov

Buckeye Buys Eagle Ford Facilities - $860 Million

Trafigura Eagle Ford Assets
Trafigura Eagle Ford Assets

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.

Read more at buckeye.com

TPA: Pipeline Industry Has Positive Economic Impact on Texas

Pipeline Photo
Pipeline Photo

As development continues to grow in the Eagle Ford Shale and in West Texas' Permian Basin, the need for additional midstream infrastructure has also grown. Not surprisingly, the pipeline industry has benefited in conjunction with the boom, and according to a new study, Texas and its' people have as well.

In a recently released Texas Tech University study, commissioned by the Texas Pipeline Association (TPA), the state's oil and gas pipeline industry purportedly provided $33-billion in overall economic impact, and supported more than 165,000 jobs in 2013. During the same time frame, the study claims industry provided for $18.7-billion in gross state revenue, and injected $1.6-billion in state and local revenue taxes.

Due to a dramatic increase in the state’s oil and gas production, the demand for additional pipelines is expected to continually increase in the coming years. The communities that are home to pipeline projects are perfectly poised to see economic benefit from the industry in terms of more jobs and increased tax revenues.
— TPA President, Thure Cannon.

According to the study's conservative estimates, pipeline operations and construction will contribute $374-billion in total economic output, and sustain 171,000 jobs annually for the next decade. During the same time frame, the study estimates $212-billion in additional gross state product and $19.5-billion in state and local government revenues.

Eagle Ford Midstream Activity

During 2014, several midstream/pipeline projects have been announced for the Eagle Ford. See below for links to recent stories:

Devon Subsidiary Constructing New Eagle Ford Oil Pipeline

Victoria Express Pipeline
Victoria Express Pipeline

Victoria Express Pipeline LLC (VEX), a subsidiary of Devon Energy, is constructing a 56.4 mile long pipeline from the Blackhawk central delivery point in DeWitt County, Texas to the inlet of Devon Gas Services's terminal at the Port of Victoria. The 12-inch pipeline is expected to come online July 1, 2014, with an ultimate capacity of 100,000 b/d.

In late 2013, Devon Energy agreed to pay GeoSouthern $6-billion for 82,000 net acres in the Eagle Ford Shale play. In the first quarter of 2014, the company said its net daily production in the Eagle Ford was 64,000 boe/d. In the second quarter, the company anticipates it will average between 65,000 and 70,000 boe/d, with more than 100,000 boe/d by next year.

Eagle Ford producers need to continuously think about how they will get their production to the refining market as activity in the play continues to grow. Wood Mackenzie recently released information stating production from the Eagle Ford Shale will reach 2-million b/d by 2020.

Read more: Devon Banking on High Returns from Eagle Ford Investment

VEX is currently conducting a binding open season to attract companies for long term commitments in exchange for access to priority capacity. The open season will end on June 19, 2014.

VEX is also constructing an additional receipt point eight miles north of Victoria in Victoria County, Texas. The company may add an additional destination point at Point Comfort in Calhoun County, Texas.