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Wednesday, September 18th, 2019

NuStar Energy L P : expands Corpus Christi storage capacity in $107 million deal

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by October 22, 2016 General

NuStar Energy is banking on higher oil prices and increased oil output from the Eagle Ford as it spends $107 million to acquire a Corpus Christi terminal with 1.15 million barrels of storage capacity from Kilgore-based Martin Midstream Partners.Its not just export capacity that were adding though, because a lot of the ships that load in the port of Corpus Christi will go up to Houston or theyll go up the eastern seaboard, CEO Brad Barron said in a phone interview. Corpus Christi has always been a strategic hub for us or has been for a long time.The San Antonio-based pipeline and storage company announced the purchase Friday. Barron said NuStar received at least $14 million from Martin Midstream as part of the deal, money that Barron said the state gave Martin Midstream for a dock relocation project.Martin Midstream CEO Ruben Martin said the deal was a prudent move since the company is trying to reduce its leverage, according to a statement. Martin Midstream also cut its quarterly investor payout by 38.5 percent earlier this year.After the U.S. Congress lifted the ban on crude oil exports in December, NuStar loaded the first shipment to be exported from the U.S. in nearly 40 years on the Theo T tanker a cargo ship destined for Italy. Barron says exports are delivering U.S. crude to ports in Europe, Singapore and beyond.U.S. Energy Information Administration data shows that in July the most recent data available U.S. crude oil exports were 474,000 barrels a day. EIA data shows that exports hit historical levels in May at 662,000 barrels a day.The lifting of the crude oil export ban came as oil prices sat below $40 a barrel. By February, they had fallen to $26 a barrel. Oil prices settled above $50 a barrel on Friday.I would say (exports) have grown slightly but not anything dramatic, Barron said. Given the world market right now, I dont expect it to grow significantly in the next twelve months. Although at some point, global supplies will reach a balance; and sooner or later, I think the U.S. will begin exporting some of that crude in big quantities.It may be a while, he added.The terminal is located next to NuStars existing operations and will increase the companys total storage to 3.1 million barrels of crude oil and 577,000 barrels of refined product. The 25-acre property receives oil and condensate from South Texas Eagle Ford Shale play, and has access to two of the Port of Corpus Christis deep-water crude oil docks.Barron said that despite low oil prices and falling investment in the Eagle Ford, NuStars analysis of the Martin Midstream property was that it could profit on its own.It will continue to be operated as a separate terminal. There are some synergies (with NuStars existing property), but we evaluated it on the business that is there currently, and we believe that business will remain, Barron said. Even if that business were to fall off somewhat, he said the deal would still be immediately profitable.Barron said Corpus Christi has advantages over other ports, saying it has better access and less competition for space compared to its bigger brother in Houston.He added that we hope to be at the bottom in terms of the economics in the oil industry.(c) International 2006-2016, SANA Provided by SyndiGate Media Inc. (Syndigate.info)., source Middle East & North African Newspapers

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