Shale Daily / NGI All News Access

Massachusetts Firm Sets Bi-Coastal Virtual Oil Pipeline

With acquisitions and infrastructure agreements in hand, Waltham, MA-based Global Partners LP, a publicly traded master limited partnership, is establishing a "virtual pipeline" for shipping North Dakota Bakken and Canadian crude oil to refineries on both the U.S. West and East Coasts.

Earlier in the year, Global Partners bought idle facilities near Portland, OR, with marine transport and storage capabilities. It also obtained a deal with Tesoro Logistics' High Plains Pipeline System for a lateral in North Dakota for getting its crude to a rail transport facility that is expected to begin flowing new crude east by the end of the third quarter.

In Oregon, local news media have focused on the fact that a four-year-old ethanol plant that received state loans and tax credits has now been transformed into what Global Partners renamed the Columbia Pacific Bio-Refinery, taking daily oil rail shipments from the Bakken.

Global Partners bought for about $95 million the 100% membership interests of Cascade Kelly Holdings LLC in the crude oil and ethanol facility along the Columbia River in Clatskanie, OR. As part of the deal, Global Partners now owns a rail transloading facility serviced via a short-line track by BNSF Railway, 200,000 bbl of storage capacity, a deepwater marine terminal with access to a 1,200-foot leased dock and the largest ethanol plant on the West Coast.

At the time, Global CEO Eric Slifka said the acquisition of the crude/ethanol facility "strategically enhances our network of origin and destination assets, and extends Global's virtual pipeline to the West Coast."

The Oregon facilities are linked via BNSF Railway to the Basin Transload facility in Beulah, ND, where Global is building a 140,000 bbl tank and truck offloading rack to support crude oil production in the Williston Basin. Earlier this year, Global completed the acquisition of 60% membership interest in Basin Transload LLC for about $85 million.

Reports in the Portland Oregonian said the Cascade Kelly facilities originally were built at a cost of $200 million for Cascade Grain at the Port of St. Helens' Port Westward Industrial Park. The owner filed for bankruptcy in 2009, less than a year after the facility's start up, producing little ethanol and eventually being mothballed, except for the storage tanks, according to the Oregonian report.

Looking eastward, Global said that with the Tesoro lateral to its storage and offloading facilities in North Dakota, it will be moving 120,000 b/d of the Bakken 738,000 b/d production to "high-value destination markets."

"Strategic expansion of our crude gathering system is a key component of the rail logistics strategy we are deploying across our assets in the Midcontinent region," said Slifka, adding that the Tesoro deal is "an important step" in achieving that objective. Tesoro's High Plains system includes about 45,000 b/d of truck-based crude and nearly 7,800 miles of pipeline and related storage assets serving the Bakken.

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