Profile: NuStar Energy LP (NS)
26 Dec 2014
NuStar Energy L.P. (NuStar Energy) is engaged in the terminalling and storage of petroleum products, the transportation of petroleum products and anhydrous ammonia, and the marketing of petroleum products. NuStar Energy operates in three business segments: storage, pipeline, and fuels marketing. As of December 31, 2013, the Company’s assets included 60 terminal and storage facilities providing 84.8 million barrels of storage capacity; 5,463 miles of refined product pipelines with 21 associated terminals providing storage capacity of 4.9 million barrels and two tank farms providing storage capacity of 1.4 million barrels; 2,000 miles of anhydrous ammonia pipelines; 1,180 miles of crude oil pipelines with 3.4 million barrels of associated storage capacity. In February 2014, the Company announced that it has completed the transaction with an affiliate of Lindsay Goldberg LLC, a private investment firm, to divest all of its 50% voting interest in an asphalt joint venture that owns a refinery located in Paulsboro, New Jersey.
NuStar Energy conducts its operations through wholly owned subsidiaries, NuStar Logistics, L.P. (NuStar Logistics) and NuStar Pipeline Operating Partnership L.P. (NuPOP). The Company’s revenues include tariffs for transporting crude oil, refined products and anhydrous ammonia through its pipelines; fees for the use of its terminal and storage facilities and related ancillary services, and sales of asphalt and other refined petroleum products. Its operations are managed by NuStar GP, LLC. NuStar GP, LLC is a subsidiary of NuStar GP Holdings, LLC (NuStar GP Holdings).
NuStar Energy’s storage segment includes terminal and storage facilities that provide storage, handling and other services for petroleum products, specialty chemicals, crude oil and other liquids and storage tanks used to store and deliver crude oil. As of December 31, 2013, the Company owned and operated 48 terminal and storage facilities in the United States, with total storage capacity of 51.7 million barrels; a terminal on the island of St. Eustatius with tank capacity of 14.4 million barrels and a transshipment facility; a terminal located in Point Tupper with tank capacity of 7.7 million barrels and a transshipment facility; Six terminals located in the United Kingdom and one terminal located in Amsterdam, the Netherlands, with total storage capacity of approximately 9.5 million barrels; two terminals in Mersin, Turkey with total storage capacity of 1.4 million barrels, and a terminal located in Nuevo Laredo, Mexico.
The Company owns and operates a 14.4 million barrel petroleum storage and terminalling facility located on the island of St. Eustatius in the Caribbean, which is located at a point of minimal deviation from shipping routes. This facility is capable of handling a range of petroleum products, including crude oil and refined products. A two-berth jetty, a two-berth monopile with platform and buoy systems, a floating hose station and an offshore single point mooring buoy with loading and unloading capabilities serve the terminal’s customers’ vessels. The fuel oil and petroleum product facilities have in-tank and in-line blending capabilities, while the crude tanks have tank-to-tank blending capability and in-tank mixers. In addition to the storage and blending services at St. Eustatius, this facility has utilized certain storage capacity for both feedstock and refined products to support our atmospheric distillation unit. This unit is capable of processing up to 25,000 barrels per day of feedstock, ranging from condensates to heavy crude oil. It owns and operates all of the berthing facilities at the St. Eustatius terminal. Separate fees apply for the use of the berthing facilities, as well as associated services, including pilotage, tug assistance, line handling, launch service, emergency response services and other ship services.
The Company’s St. James terminal has a total storage capacity of 8.9 million barrels. In addition, the facility has a rail-loading facility and three docks with barge and ship access. The facility is located on almost 900 acres of land, some of which is undeveloped. The Company owns and operates a7.7 million barrel terminalling and storage facility located at Point Tupper on the Strait of Canso, near Port Hawkesbury, Nova Scotia, which is located approximately 700 miles from New York City and 850 miles from Philadelphia. This facility is a marine terminal on the North American Atlantic coast, with access to the East Coast, Canada and the Midwestern United States through the St. Lawrence Seaway and the Great Lakes system. The Point Tupper facility can accommodate large crude carriers and ultra large crude carriers for loading and discharging crude oil, petroleum products and petrochemicals. Crude oil and petroleum product movements at the terminal are fully automated. Separate fees apply for the use of the jetty facility, as well as associated services, including pilotage, tug assistance, line handling, launch service, spill response services and other ship services.
The Company’s terminal and storage facility in Piney Point is located on approximately 400 acres on the Potomac River. The Piney Point terminal has 5.4 million barrels of storage capacity and is the closest deep-water facility to Washington, D.C. The terminal has a dock with a 36-foot draft for tankers and four berths for barges. It also has truck-loading facilities, product-blending capabilities and is connected to a pipeline that supplies residual fuel oil to two power generating stations. The Company’s Amsterdam terminal has a total storage capacity of 3.8 million barrels. This facility is located at the Port of Amsterdam and primarily stores petroleum products, including gasoline, diesel and fuel oil. This facility has two docks for vessels and five docks for inland barges. NuStar owns 50% of ST Linden Terminal LLC, which owns a terminal and storage facility in Linden, New Jersey. The terminal is located on a 44-acre facility that provides it with deep-water terminalling capabilities at New York Harbor. This terminal primarily stores petroleum products, including gasoline, jet fuel and fuel oils. The facility has a total storage capacity of 4.3 million barrels and can receive and deliver products through ship, barge and pipeline. The terminal includes two docks with draft limits of 36 and 26 feet, respectively.
Revenues for the storage segment include fees for tank storage agreements, in which a customer agrees to pay for a certain amount of storage in a tank over a period of time (storage lease revenues), and throughput agreements, in which a customer pays a fee per barrel for volumes moving through its terminals and tanks (throughput revenues). The Company’s terminals provide blending, additive injections, handling and filtering services. It charges a fee for each barrel of crude oil and other feedstocks, which it delivers to Valero Energy Corporation's (Valero Energy) Benicia, Corpus Christi West and Texas City refineries from its crude oil storage tanks. Its facilities at Point Tupper and St. Eustatius charge fees to provide services, such as pilotage, tug assistance, line handling, launch service, spill response services and other ship services. The majority of products stored in its terminals are refined petroleum products.
NuStar Energy’s pipeline operations consist of the transportation of refined petroleum products, crude oil and anhydrous ammonia. Refined product pipelines in Texas, Oklahoma, Colorado and New Mexico, Kansas, Nebraska, Iowa, South Dakota, North Dakota and Minnesota cover approximately 5,463 miles. As of December 31, 2013, it owned and operated refined product pipelines with an aggregate length of 3,113 miles originating at Valero Energy’s McKee, Three Rivers and Corpus Christi refineries and terminating at certain of NuStar Energy’s terminals, or connecting to third-party pipelines or terminals for further distribution, including a 25-mile hydrogen pipeline (collectively, the Central West System); a 1,910-mile refined product pipeline originating in southern Kansas and terminating at Jamestown, North Dakota, with a western extension to North Platte, Nebraska and an eastern extension into Iowa (the East Pipeline); a 440-mile refined product pipeline originating at Tesoro Corporation’s Mandan, North Dakota refinery and terminating in Minneapolis, Minnesota (the North Pipeline); crude oil pipelines in Texas, Oklahoma, Kansas, Colorado and Illinois with an aggregate length of 1,180 miles and crude oil storage facilities providing 3.4 million barrels of storage capacity in Texas, Oklahoma and Colorado that are located along the crude oil pipelines, and a 2,000-mile anhydrous ammonia pipeline originating at the Louisiana delta area that travels north through the midwestern United States forking east and west to terminate in Nebraska and Indiana (the Ammonia Pipeline).
The East Pipeline covers 1,910 miles, including 242 miles that are temporarily idled, and moves refined products and natural gas liquids north in pipelines ranging in diameter from 6 inches to 16 inches. The East Pipeline system also includes storage capacity of approximately 1.4 million barrels at its two tanks farms at McPherson and El Dorado, Kansas. The East Pipeline transports refined petroleum products and natural gas liquids to NuStar Energy and third party terminals along the system and to receiving pipeline connections in Kansas. During 2013, the East Pipeline transported approximately 48.4 million barrels. The North Pipeline originates at Tesoro’s Mandan, North Dakota refinery and runs from west to east approximately 440 miles from its origin to the Minneapolis, Minnesota area. During 2013, the North Pipeline transported approximately 16.8 million barrels.
The East and North Pipelines also include 21 truck-loading terminals, through which refined petroleum products are delivered to storage tanks and then loaded into petroleum product transport trucks. The Ammonia Pipeline is connected to multiple third-party-owned terminals, which include industrial facility delivery locations. Product is supplied to the pipeline from anhydrous ammonia plants in Louisiana and imported product delivered through the marine terminals. Anhydrous ammonia is used as agricultural fertilizer. It is also used as a feedstock to produce other nitrogen derivative fertilizers and explosives. During 2013, the Ammonia Pipeline transported approximately 1.3 million tons (or approximately 11.9 million barrels). The Company’s crude oil pipelines transport crude oil and other feedstocks from various points in Texas, Oklahoma, Kansas and Colorado to Valero Energy’s McKee, Three Rivers and Ardmore refineries. It uses crude oil storage facilities in Texas, Oklahoma and Colorado, located along the crude oil pipelines, to store and batch crude oil prior to shipment in the crude oil pipelines. Its crude oil pipelines also transport crude oil and other feedstocks to the ConocoPhillips Wood River refinery in Illinois. During 2013, the crude oil pipelines transported approximately 133.5 million barrels. It also owns three single-use pipelines, located near Umatilla, Oregon, Rawlins, Wyoming and Pasco, Washington, each of which supplies diesel fuel to a railroad fueling facility.
Revenues for the pipelines are based upon origin-to-destination throughput volumes traveling through its pipelines and their related tariff rates. Its refined petroleum product pipelines delivers products to the pipeline from refineries or third-party pipelines. Shipments are tested or receive certifications to ensure compliance with its product specifications. It charges its shippers tariff rates based on transportation from the origination point on the pipeline to the point of delivery. It invoices its refined product shippers upon delivery for its Central West System and its North and Ammonia Pipelines, and it invoices its shippers on its East Pipeline when their product enters the line. Shippers on the Company’s crude oil pipelines deliver crude oil to the pipelines for transport to refineries that connect to the pipelines. It uses Supervisory Control and Data Acquisition remote supervisory control software programs to monitor and control its pipelines.
NuStar Energy purchases crude oil and refined petroleum products for resale. The results of operations for the fuels marketing segment depend largely on the margin between its cost and the sales prices of the products it markets. Therefore, the results of operations for this segment are more sensitive to changes in commodity prices compared to the operations of the storage and pipeline segments. NuStar Energy’s fuels marketing operations provide it the opportunity to generate additional gross margin while complementing the activities of its storage and pipeline segments. These operations involve the purchase of crude oil, fuel oil, bunker fuel, fuel oil blending components and other refined products for resale. NuStar Energy utilizes transportation and storage assets, including its own terminals, pipelines and rail unloading facilities, at its St. James, Texas City and St. Eustatius terminals. Rates charged by its storage segment and tariffs charged by its pipeline segment to the fuels marketing segment are consistent with rates charged to third parties. Since NuStar Energy’s fuels marketing operations expose it to commodity price risk, it sometimes enters into derivative instruments to mitigate the effect of commodity price fluctuations on its operations. The derivative instruments it uses consist primarily of commodity futures and swap contracts.
Fuels marketing customers include major integrated refiners and trading companies. Customers for the bunker fuel sales are mainly ship owners, including cruise line companies. No customer accounted for greater than 11% of the total segment revenues of the fuels marketing segment for the year ended December 31, 2013.
NuStar Energy’s fuels marketing operations have numerous competitors, including large integrated refiners, marketing affiliates of other partnerships in the industry, as well as various international and domestic trading companies. In the sale of bunker fuel, it competes with ports offering bunker fuels that are along the route of travel of the vessel.
On January 1, 2013, NuStar Energy sold the San Antonio Refinery and related assets, which included inventory, a terminal in Elmendorf, Texas and a pipeline connecting the terminal and refinery.
On September 28, 2012, it sold a 50% ownership interest in NuStar Asphalt LLC (Asphalt JV), previously a wholly-owned subsidiary, to an affiliate of Lindsay Goldberg LLC, a private investment firm. Asphalt JV owns and operates the asphalt refining assets that were previously wholly owned by NuStar Energy, including an asphalt refinery located in Paulsboro, New Jersey and a terminal in Savannah, Georgia.
In February 2014, NuStar divested its remaining 50% ownership interest in Asphalt JV.
NuStar Energy LP
19003 IH-10 West
SAN ANTONIO TX 78257