Calumet Specialty Products Partners LP unit Calumet San Antonio Refining LLC has contracted with TexStar Midstream Logistics LP for TexStar to construct, own and operate a 30,000 b/d crude oil pipeline system to carry Eagle Ford crude oil to Calumet’s San Antonio, TX, refinery.

Under the 15-year agreement, TexStar has committed to install and operate the Karnes North Pipeline System (KNPS), an eight-inch diameter, 50-mile pipeline that will transport crude oil from Karnes City, TX, a major center of oil production in the Eagle Ford region, to Calumet’s Elmendorf, TX, terminal, a key supply hub for Calumet’s San Antonio refinery. It is expected that the San Antonio refinery will receive at least 10,000 b/d of crude oil through the KNPS-Elmendorf terminal supply route once the line comes into service during the fourth quarter 2014.

Calumet has been receiving crude deliveries at the San Antonio refinery via truck, and it said the pipeline should “significantly reduce” its transport costs. Over time, the volume of crude shipped on KNPS is expected to exceed 10,000 b/d, which should contribute to incremental cost savings, Calumet said. “We expect this agreement will help to further improve the long-term profitability of our San Antonio refinery,” said Calumet Specialty COO Jennifer Straumins.

It was one year ago that the deal for Calumet to acquire the San Antonio refinery from NuStar Energy LP was announced (see Shale Daily, Dec. 18, 2012).

“During the fourth quarter 2013, we successfully completed a project that allows the San Antonio refinery to blend heavy reformates, light naphtha and ethanol to produce up to 3,000 b/d of higher-value finished gasoline,” Straumins said. “Early into the first quarter 2014, we expect to complete a crude unit expansion at the San Antonio refinery. This expansion will increase our total capacity at the facility from 14,500 b/d to 17,500 b/d, while allowing for increased production of jet fuel, diesel fuel and gasoline.”