Phillips 66 Takes Over ConocoPhillips Downstream
Sunoco Sold To Energy Transfer Partners
Kinder Morgan To Purchase El Paso Corporation
Tesoro Sells Martinez Terminal To Tesoro Logistics
Whole Energy Building Oregon Biodiesel Terminal

PHILLIPS 66 TAKES OVER CONOCOPHILLIPS DOWNSTREAM

HOUSTON, TX. — The downstream operations of ConocoPhillips have been officially spun off into a new company, Phillips 66, effective as of May 1.

The new downstream company, led by Chairman and CEO Greg Garland, will continue to be headquartered in Houston. It will operate 15 refineries, 13 of them located in the United States, and has 8,300 branded sites in the U.S. and 1,700 in Europe. As Phillips 66, the company will also operate 15,000 miles of pipeline and 56 terminals.

"As ConocoPhillips, a lot of our free cash had gone upstream," noted Andy Viens, president of Global Marketing for Phillips 66, "which is where it should go as an integrated oil company. So now, as Phillips 66, we've gone from a stepchild to an only child and we think we're going to have cash to invest."

Viens, speaking at the recent SIGMA Spring Meeting, noted that as Phillips 66, the company is "still a 'Fortune 10' company. We have 15,000 employees."

"We're very focused on returns and capital allocations with the new company," noted Viens. "You'll see us pay down some debt in the next couple of years but we'll also keep some cash to weather the storms and take care of the dips."

He continued, "We think going forward with the diversity we have in the refining profile, we're in good position. In the U.S. we want to make sure the barrels are flowing.

"We kind of like the businesses we're in today," Viens noted. "Unbranded has been good for us. Our business partners who are out there on the unbranded side have good business models and are flexible and we like that a lot. We have fixed contract and we can also do day deals. We are the largest FBO chain in the U.S. with aviation fuels." He added, "We like the brands a lot. We think they have good consumer acceptance."

Viens concluded, "The one thing I know is my business changes every couple of years. One of the things we know is we will continue to invest on the branded side to make sure we're driving business to your site."

SUNOCO SOLD TO ENERGY TRANSFER PARTNERS

PHILADELPHIA, PA. — Sunoco Inc. announced at the end of April that it has agreed to be purchased by Energy Transfer Partners, L.P., of Dallas, TX. The purchase price was approximately $5.3 billion.

"This transaction will enable Sunoco's businesses to realize their full potential by becoming an important part of a diversified leader in the energy industry," said Brian MacDonald, Sunoco's president and chief executive officer, announcing the deal. "In addition, it delivers an attractive premium to our shareholders while enabling them to participate in the future growth of the business. The combination with ETP provides substantial future value-creation opportunities for Sunoco shareholders and ETP unitholders alike."

In the West, Energy Transfer Partners has pipeline operations in Arizona, Colorado, New Mexico, and Utah as well as six other Southern states and the largest intrastate pipeline system in Texas. The company also has natural gas operations that include approximately 23,500 miles of gathering and transportation pipelines, treating and processing assets, and three storage facilities located in Texas. Its Energy Transfer Equity division is the parent of Southern Union Company and owns approximately 45,000 miles of natural gas and natural gas liquids pipelines.

With the addition of the Sunoco assets, ETP will "expand its geographic footprint and strengthen its presence in the transportation, terminalling and logistics of crude oil, NGLs and refined products."

Included in the deal is Sunoco's branded retail business which operates approximately 4,900 retail locations in the U.S., primarily in the East Coast region.

KINDER MORGAN TO PURCHASE EL PASO CORPORATION

HOUSTON, TX. — Kinder Morgan, Inc. has received approval from the Federal Trade Commission to acquire natural gas pipeline company El Paso Corporation for approximately $38 billion in cash and the assumption of El Paso's debt.

To gain FTC approval, Kinder Morgan agreed to sell its Kinder Morgan Interstate Gas Transmission, Trailblazer Pipeline Company, its Casper-Douglas natural gas processing and West Frenchie Draw treating facilities in Wyoming, and the company's 50 percent interest in the Rockies Express Pipeline. The FTC agreement allows the Kinder Morgan six months to sell these assets.

When the acquisition is complete, the combined company will operate the largest natural gas pipeline network in the United States, be the largest independent transporter of petroleum products in the United States, the largest transporter of CO2 in the United States and the largest independent terminal owner/operator in the United States, making Kinder Morgan the fourth largest energy company in North America with a value estimated at $94 billion.

"We are pleased to receive FTC approval, and we look forward to becoming the largest midstream and the fourth largest energy company in North America when the transaction is completed," said Kinder Morgan chairman and CEO Richard Kinder.

TESORO SELLS MARTINEZ TERMINAL TO TESORO LOGISTICS

MARTINEZ, CA. — Tesoro Corporation has sold its Martinez Crude Oil Marine Terminal, located here, to Tesoro Logistics for $75 million. The movement of the terminal assets took effect on April 1.

The Martinez Marine Terminal is located on the Sacramento River near Tesoro's Martinez refinery. Included in the deal were the terminal's single-berth dock, five crude oil storage tanks with a combined 425,000 bbl of capacity, and related pipelines.

The terminal receives crude oil through marine vessels for delivery to Tesoro's Martinez refinery. The estimated throughput capacity for the terminal is approximately 145,000 bpd. As part of the transfer of assets, Tesoro and Tesoro Logistics have entered into a 10-year terminaling agreement with a minimum throughput commitment.

"The contribution of the Martinez Crude Oil Marine Terminal...demonstrates Tesoro's commitment to capturing the full value of our logistics assets," said Greg Goff, Tesoro Corp.'s president and CEO and Tesoro Logistics' chairman and CEO, "and helping the Partnership expand its portfolio."

WHOLE ENERGY BUILDING OREGON BIODIESEL TERMINAL

BELLINGHAM, WA. — Whole Energy Fuels Corp., based here, has announced that they plan to build a new biodiesel terminal in northwest Portland, OR.

"The new Whole Energy biodiesel terminal is ideally located right in the heart of Northwest Portland, allowing for reduced customer shipping cost and trucking time," said Atul Deshmane, president of Whole Energy, announcing the new facility. "Vertical integration of a biodiesel distribution terminal with biodiesel manufacturing, based on sustainably produced recycled cooking oil, will benefit the city of Portland by reducing the climate impact of fuel use."

Deshmane added, "This project presents an exciting opportunity for the city of Portland and other regional fleets to access locally made biodiesel right in the heart of the Northwest Portland."

The new facility will reportedly integrate the Whole Energy biodiesel operations with Beaver Biodiesel and Oregon Oils, both of whom also collect and recycle waste cooking oil.

The City of Portland currently has B5 mandated for its diesel use and B10 could be mandated by the city if specifications for the alternative fuel blend are approved by the ASTM.

Originally published in the June 2012 issue of O&A Marketing News.
Copyright 2012 by KAL Publications Inc.