Phillips 66 Partners agreed to acquire two newly constructed crude oil rail-unloading facilities and certain assets associated with the Cross-Channel Connector Pipeline from Phillips 66, the partnership said in a statement. The unloading facilities are located in Linden, N.J., and Ferndale, Wash., and are being acquired for $330 million. The assets associated with the pipeline will be acquired for an additional $10 million. The acquisition is expected to close in early December and to be immediately accretive to unitholders.
Assets to be acquired include:
- The Bayway Rail-Unloading Facility in the Phillips 66 Bayway Refinery, which is able to unload 120 railcars simultaneously and has a crude-unloading capacity of 75,000 barrels per day (bbl/d);
- The Ferndale Rail-Unloading Facility adjacent to the Phillips 66 Ferndale Refinery, which is scheduled to enter service in November with an expected unloading capacity of 54 railcars simultaneously and 30,000 bbl/d of crude oil; and
- Cross-Channel Connector Pipeline assets including an active 2.5-mile, 20-inch diameter refined products pipeline and an idled, 2.6-mile, 20-inch diameter refined products pipeline that runs under the Houston Ship Channel. The active segment transports refined products between Phillips 66 Partners’ Pasadena Terminal and Kinder Morgan’s Pasadena Terminal.
At closing, Phillips 66 Partners expects to use the Cross-Channel Connector Pipeline assets to develop a new organic project to provide shippers access from its Pasadena Terminal to third-party systems north of the Houston Ship Channel. The project has expected additional capital costs of $12.4 million and is underwritten by long-term transportation agreements with multiple shippers. It has a planned initial capacity of up to 180,000 bbl/d and an expected in-service date in second-quarter 2015.
In connection with the closing, Phillips 66 and Phillips 66 Partners will enter into 10-year terminal services agreements for all of the available rail-unloading capacity. The partnership will finance the acquisition with $28 million from its revolving credit facility, assumption of a five-year, $244 million note payable to a subsidiary of Phillips 66 and the issuance to Phillips 66 of 1,066,412 common and 21,764 general partner units valued at $68 million.
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