Making good on its plan to continue a “strategic redirection” of its business, NuStar Energy LP on Monday said it has agreed sell its San Antonio refinery and related assets, including a terminal in Elmendorf, TX, and a pipeline connecting the terminal and refinery, to Calumet Specialty Products Partners, LP for $100 million, plus closing date inventory estimated to be $15 million.
NuStar purchased the refinery and terminal out of bankruptcy in April 2011 for $41 million, and the company said it has invested approximately $54 million since then on improvements to the refinery.
NuStar announced its plans to sell the refinery last month (see Shale Daily, Nov. 9) as part of its strategy of turning away from the earnings volatility associated with the margin-based refining business in order to further grow its more stable, fee-based pipeline and storage operations through internal growth projects and acquisitions, especially in the Eagle Ford Shale region and other U.S. shale plays, where NuStar already has extensive pipeline and storage operations.
NuStar said it will use proceeds from the transaction, which is expected to have an effective date of Jan. 1, and close on Jan. 2, to fund the growth of those fee-based pipeline and storage operations.
“As we stated when we announced our intent to sell the refinery, it was an excellent opportunistic purchase for us, even though fuels refining wasn’t part of our strategic plan,” said NuStar CEO Curt Anastasio. “The refinery has an outstanding group of employees and we enjoyed working with them to make a tremendous amount of improvements to the refinery that made it a safer and more environmentally sound facility that is also much more reliable and profitable.
“This transaction will give the refinery employees the opportunity to be a part of a refining company with multiple refineries that has the depth of refining resources and expertise to provide the support the refinery needs to succeed over the long-term,” Anastasio added.
Located on the South Side of San Antonio, the 14,500-b/d refinery produces and sells various products, including jet fuels, ultra-low sulfur diesel, naphtha, reformates, liquefied petroleum gas, specialty solvents and other highly specialized fuels, to commercial and retail customers and the U.S. military. The Elmendorf terminal, which is approximately 12 miles away from the refinery, stores the crude oil that is processed at the refinery.
After purchasing the assets in 2011, NuStar built and recently put into service a 12-mile pipeline between the terminal and the refinery that now moves the crude to the refinery, effectively removing approximately 80 crude delivery trucks per day from San Antonio roads. Not only is this pipeline reducing traffic and cutting transportation costs, it also is expected to reduce refinery unplanned outages and increase refinery runs because the crude oil delivered by pipeline has a more consistent quality.
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