Valero Files To Create a Logistics MLP - Valero Energy Partners

Valero Logistics Growth Investments

Valero has filed a registration statement with the SEC for the initial public offering of Valero Energy Partners (VLP).

VLP will serve as a vehicle for dropping down (selling) logistics assets from Valero. Logistics assets include everything that helps Valero delivery quality crude to its refineries: pipelines, rail cars, rail unloading, barges, ships, docks, tanks, etc.

Logistics MLPs trade at 10-15 times EBITDA (earnings before interest, taxes, depreciation, and amortization), while refineries trade at just 3-5 times EBITDA. That alone provides for incentive to spin off the assets to create value. Add the fact that more than 40% of Valero's investments are in logistics assets and its easy to see why VLP could easily be a stand along company.

Eagle Ford assets will likely be included in the initial transaction:

Valero Energy Partners LP expects its initial assets to include crude oil and refined petroleum products pipeline and terminal systems in the Gulf Coast and Mid-Continent regions of the United States that are integral to the operations of Valero's refinery located in Port Arthur, Texas, its McKee refinery located in Sunray, Texas, and its refinery located in Memphis, Tennessee.

Before the company can go public, the Valero board will need to approve the spin off and a management team will need to be assembled.

Enterprise Completes 7th NGL Fractionator at Mont Belvieu

Mont Belvieu Fractionator

Enterprise Products brought its seventh fractionator online at the company's Mont Belvieu Complex earlier in September.

The new unit adds 85,000 b/d of fractionation capacity and expands the company's capacity at Mont Belvieu to 570,000 b/d.  An eighth plant will be online at the end of the year and will add another 85,000 b/d of capacity.

NGL fractionation capacity is important for shale plays like the Eagle Ford where high BTU gas is produced. Without fractionation capacity, the value of the individual NGL components, ethane, propane, butane, etc., can not be extracted from a mixed stream of NGLs.

“Our eighth fractionator is also running ahead of schedule and should be in-service by mid-fourth quarter 2013. Fractionators seven and eight will increase total capacity at the partnership’s Mont Belvieu complex to 655,000 BPD, compared to 400,000 BPD just three years ago.”

— Michael A. Creel, CEO

Enterprise operates the units and Western Gas owns a 25% interest in the 7th and 8th fractionators at Mont Belvieu.

Read the full press release enterpriseproducts.com

Port of Corpus Christi's Eagle Ford Oil Exports Exceed Oil Imports

The Port of Corpus Christi has reached a milestone that won't likely be reversed any time soon. Oil exports from the port are exceeding imports. During the month of August, the port saw oil exports rise to almost 3.9 million barrels (~124,000 b/d) compared to inbound cargo of just 2.8 million barrels (~90,000 b/d). One year prior in August of 2012, the port was exporting just 2.8 million barrels (~90,000 b/d) and importing over 3 million barrels (~100,000 b/d).

“There’s new wells being drilled everyday. Mainly, right now, they’re oil,” John LaRue, Port Director, said. “The gas part has not, it initially took off but because the price of natural gas is so low, they’re not drilling as many of those.”

Plains & Enterprise Announce Eagle Ford JV Pipeline Expansion

Plains All American Eagle Ford Assets

Plains All American and Enterprise Products are planning a $120 million expansion of the Eagle Ford JV Pipeline system. The expansion will increase the pipeline's capacity to 470,000 b/d of light and medium crude grades, as well as increase storage capacity in Corpus Christi, Gardendale, and Tilden by 2.3 million barrels.

The JV pipeline system is largely in service and will be completed by September 30, 2013. The companies will add capacity by looping pipelines and adding pumping capacity. The expansion will be complete by the second quarter of 2015. The JV pipeline was initially planned with potential for 350,000 b/d of capacity.

The expansion will be completed in time to support production moving through Plains' Cactus Pipeline. The Cactus Pipeline will have the capacity to move 200,000 b/d from West Texas into the Eagle Ford region.

Read the full press release at paalp.com or enterpriseproducts.com

Magellan Midstream Buys West Columbia Pipeline From Shell

Magellan Houston System Map

Magellan Midstream Partners has acquired a 15-mile, 16-inch Houston area pipeline from Shell. The pipeline is bi-directional, with capacity of 150,000 b/d.

The pipeline moves crude from Genoa Junction to/from a Magellan terminal in East Houston.

The company stated, "The West Columbia pipeline will provide an additional route for crude oil, particularly barrels from the Eagle Ford, to reach our East Houston terminal for storage or subsequent delivery into Shell’s reversed Ho-Ho system."

The 300,000 b/d Ho-Ho system allows for connection to refineries in Louisiana. Read more about Shell's reversed Ho-Ho system in the article - Shell Reversing Houma to Houston Pipeline

Neither Magellan Midstream nor Shell released the financial details of the transaction.