Valero Partners Wynnewood LLC – an indirect wholly owned subsidiary of Valero Energy Partners LP – has acquired a 40% undivided interest in the Hewitt segment of Plains All American Pipeline, L.P.’s (Plains) Red River pipeline for approximately US$70 million
The Hewitt segment of the pipeline is a newly constructed 138 mile, 16 in. crude oil pipeline with 150 000 bpd of capacity. The purchase also included a 40% undivided interest in two 150 000 shell barrel capacity tanks, which are located at Hewitt Station. The Hewitt segment originates at Plains Marketing L.P.’s Cushing (Oklahoma) terminal and ends at Hewitt Station in Hewitt (Oklahoma).
The pipeline began supplying crude oil to Valero’s refinery in Ardmore (Oklahoma) in January 2017.
The Partnership funded the acquisition with cash on hand.
Along with this acquisition, the partnership entered into a 10 year throughput agreement with a subsidiary of Valero Energy Corporation. Consistent with the partnership’s existing portfolio of assets, the agreement includes a minimum volume commitment, a five year renewal term and no direct commodity price exposure.
“This third-party transaction fits the partnership’s growth strategy, where we focus on acquisitions that are strategic to Valero’s core business or that provide third-party revenue,” said Joe Gorder, Chairman and Chief Executive Officer of VLP’s general partner. “It also demonstrates our measured approach to growing the Partnership while preserving our stable, fee-based cash flow profile.”
The partnership retains a right to participate in any future expansions of the Hewitt segment of the Red River pipeline. Plains will serve as the operator of the pipeline.
Read the article online at: https://www.worldpipelines.com/business-news/23012017/valero-energy-acquires-red-river-pipeline-interest/