Platts Pipeline Development and Expansion NuStar Energy · PDF file4 Platts Pipeline...
Transcript of Platts Pipeline Development and Expansion NuStar Energy · PDF file4 Platts Pipeline...
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Platts Pipeline Development and Expansion NuStar Energy’s Eagle Ford Program
Presented by Mike Crossey September 17, 2013
NuStar Overview
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Asset Stats:
Operations in the U.S., Canada, Mexico, the Netherlands, including St. Eustatius in the Caribbean, the United Kingdom and Turkey.
Own 87 terminal and storage facilities
Approximately 97 million barrels of storage capacity
8,621 miles of crude oil and refined product pipelines
50% interest in a joint venture that owns a terminal and an asphalt refinery with throughput capacity of 74 MBPD
Shale Oil Providing Growth Opportunities in NuStar’s Transportation Segment
• A key strategic objective is to grow earnings from fee-based logistics services
— Redeploying existing and/or building new pipelines and terminals in the shale oil regions
— Diversifying customer base and expanding logistics services for crude oil, condensate and natural gas liquids through asset modifications, expansions and strategic
acquisitions • Majority of internal growth capital will be spent on shale pipeline projects
• Tremendous opportunities for growth in our own backyard
• To date NuStar has completed five internal growth projects in the Eagle Ford Shale
region with additional projects forthcoming
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NuStar Overview
Pettus South Pipeline Reactivation Project for Koch Pipeline
South Texas Crude Oil System (Acquired from TexStar)New 12” Pipeline Constructed for Valero
Existing NuStar Pipeline Reversals
NuStar’s Oakville Terminal
THREE RIVERSREFINERY
OAKVILLE PETTUS
NORTH BEACHValero West Plant
CORPUS CHRISTI
Koch Mayo Sta.
PAWNEE
Internal Growth Project #1: Reactivation of Pettus to Corpus Christi Pipeline
• Entered into a pipeline connection and capacity lease agreement with Koch Pipeline • NuStar reactivated a 60-mile pipeline that had been idle since November 2005 • Project connected our existing Pettus, Texas to Corpus Christi pipeline segment to Koch’s
existing pipeline • Placed into service July 2011 with pipeline capacity of around 50 thousand barrels per day
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NuStar Overview
Pettus South Pipeline Reactivation Project for Koch Pipeline
South Texas Crude Oil System (Acquired from TexStar)New 12” Pipeline Constructed for Valero
Existing NuStar Pipeline Reversals
NuStar’s Oakville Terminal
THREE RIVERSREFINERY
OAKVILLE PETTUS
NORTH BEACHValero West Plant
CORPUS CHRISTI
Koch Mayo Sta.
PAWNEE
Internal Growth Project #2: Reversal of Corpus Christi to Three Rivers 8” Pipeline
• Pipeline historically moved refined products from Valero’s Corpus Christi refinery to Three Rivers area • Reversed and placed in crude oil service to supply Valero’s Corpus Christi refinery in September 2011
– Pipeline can be utilized to supply crude oil to Valero Energy’s Corpus Christi or Three Rivers refineries • Throughput capacity of approximately 40 thousand barrels per day
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NuStar Overview
Pettus South Pipeline Reactivation Project for Koch Pipeline
South Texas Crude Oil System (Acquired from TexStar)New 12” Pipeline Constructed for Valero
Existing NuStar Pipeline Reversals
NuStar’s Oakville Terminal
THREE RIVERSREFINERY
OAKVILLE PETTUS
NORTH BEACHValero West Plant
CORPUS CHRISTI
Koch Mayo Sta.
PAWNEE
Internal Growth Project #3: Construction of New 12” Crude Oil Pipeline
• Completed construction of a 55-mile 12” crude oil pipeline in the 4th quarter of 2012, which is utilized by Valero Energy
• Pipeline can be utilized to supply crude to Valero Energy’s Corpus Christi or Three Rivers refineries • Capacity of up to 100 thousand barrels per day
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NuStar Overview
Pettus South Pipeline Reactivation Project for Koch Pipeline
South Texas Crude Oil System (Acquired from TexStar)New 12” Pipeline Constructed for Valero
Existing NuStar Pipeline Reversals
NuStar’s Oakville Terminal
THREE RIVERSREFINERY
OAKVILLE PETTUS
NORTH BEACHValero West Plant
CORPUS CHRISTI
Koch Mayo Sta.
PAWNEE
Internal Growth Project #4: Connection of 16” Corpus to Three Rivers Pipeline
to TexStar Pipeline System • TexStar Midstream services constructed a 65-mile, 12-inch pipeline that can transport 100 thousand barrels per day of
crude and condensate from Frio, McMullen and La Salle Counties, Texas to Three Rivers, Texas • TexStar pipeline is interconnected to a new storage facility constructed at Three Rivers, Texas by NuStar
– Storage facility comprised of three 200 thousand barrel storage tanks • Storage facility connected to NuStar’s existing 16-inch pipeline that can transport up to 240 thousand barrels per day to
NuStar’s Corpus Christi North Beach storage terminal • Connection and storage facility completed in 4th quarter 2012
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Internal Growth Project #5: Pawnee Pipeline Further Expands Capacity for Shipper
in Eastern Portion of Eagle Ford • NuStar completed construction on a 100 thousand barrel terminal facility, truck offloading facilities and a pipeline
connection to NuStar’s existing 12” Pettus line for ConocoPhillips – 12” Pettus line is connected to NuStar’s Three Rivers to Corpus 16” line giving shippers the ability to move Eagle
Ford production to Corpus Christi • Dock expansion at Corpus Christi North Beach Terminal will give ConocoPhillips and other customers more options to
move Eagle Ford crude – Projected completion in the 2nd quarter of 2014
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December 2012 Crude Oil Pipeline Acquisition from TexStar
• In December 2012, NuStar acquired TexStar’s 140 miles of crude oil transmission and gathering lines as well as five storage terminals for $325 million
• Provides Eagle Ford Shale region crude oil producers the ability to move production to Corpus Christi – Crude oil producers have access to NuStar’s Corpus Christi storage and dock space that can be utilized for shipments to
other markets • Currently shipping around near capacity and have active open season to secure commitments to expand
the system
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Open Season for South Texas Crude Oil Pipeline System Project • South Texas Open Season commenced July 17, 2013 and ends September 30, 2013 • Assessing shipper interest in committed space to transport Eagle Ford Shale crude oil from several terminal
locations on our South Texas Crude Oil Pipeline System to our Corpus Christi North beach facility • Proposed project includes pipeline capacity upgrades to segments of our South Texas Crude Oil Pipeline System • Total incremental capacity of 100,000 barrels per day would occur in two phases:
– First phase would add incremental throughput capacity of approximately 35,000 barrels per day and should be available for service in the third quarter of 2014
– Second phase would add incremental throughput capacity of approximately 65,000 barrels per day and should be available for service in the first quarter of 2015
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NuStar’s Eagle Ford Shale Pipeline System
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161 175200
320198
228
308
428
0
100
200
300
400
500
4Q 2012 2Q 2013 4Q 2013 4Q 2014
Throughputs (MBPD) Capacity (MBPD)
NuStar’s Throughputs in the Eagle Ford Shale Expected to Increase
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Eagle Ford Shale a Transformative Economic Impact for Texas but has Resulted in Transportation Challenges
• Production in the Eagle Ford Shale continues to increase and will exceed 1 million barrels per day by the end of 2013
• As producers better understand the formations in their drilling programs, efficiencies are emerging, allowing more wells to be drilled with fewer rigs
• Advantages for the Eagle Ford Shale producers is close proximity to US Gulf Coast refineries and greater infrastructure
• Most crude oil imports came to the US Gulf Coast and supplied Gulf Coast and mid-continent refineries; now flow is reversed
– Growth in U.S. light oil production, particularly from the Williston, Eagle Ford and Permian, has displaced an increasing amount of imported light oil
• Much greater volumes of shale oil have overwhelmed transportation and storage infrastructure, however, numerous large-diameter pipeline projects completed and underway
Source: EIA Data, BENTEK Energy April 2013 Crude Oil Production Monitor
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• Current takeaway capacity expected to be approximately 1.6 million barrels per day, which will equate to production estimates by 2018
• Customer interest is driving continued takeaway capacity – Customers want optionality and capacity for growth in areas served by NuStar
• Continued production growth in oil window as producers become more efficient and drill to hold acreage
Eagle Ford Production vs. Takeaway Capacity
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200
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600
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1,200
1,400
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Eagle Ford Production vs. Takeaway Capacity Projections(Barrels per Day in thousands)
Historical Eagle Ford Crude Production Bentek Crude Projection Total Eagle Ford Pipeline Takeaway Capacity
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Major Eagle Ford Shale Take Away Projects
Source: Company Websites
Line Capacity PrimaryNo. Company Size BPD Destination Route Connections
1 NuStar Energy Various 428,000 Corpus Christi
Gardendale to Corpus Christi Marine Terminal; Three Rivers - Corpus Christi Crude Pipelines; Pettus to Corpus Christi Pipeline; Pawnee to Corpus Christi Pipeline
Corpus Christi area refineries, NuStar Corpus Christi North Beach Terminal; Open Season Announced for Expansion of South Texas Crude Oil Pipeline System
2 Enterprise 24" 350,000 HoustonWilson County to Sealy, Texas; Fed from existing gathering system
Houston area refineries; ECHO Terminal
3 Plains-Enterprise JV 24" 350,000Corpus Christi
and/or HoustonGardendale to Sealy/Houston or Corpus Christi Marine Terminal
Move crude and condensate; Delivers to Three Rivers
4Kinder Morgan Eagle Ford Crude/Condensate
24" 300,000 HoustonDeWitt County to Houston; Building 27-mile, 12'' lateral to Phillips 66 Sweeney refinery (100,000 BPD)
Move crude to upper ship channel and Galena Park condensate facility in 2014
5 Koch Pipeline/Flint Hills Resources 20" 350,000 Corpus ChristiVarious pipelines into Corpus Christi; 250,000 BPD from Eagle Ford; Truck terminal at Helena; Pipeline to Pettus
Pettus to Corpus Christi via NuStar Pipeline; Supply Flint Hill's 300,000 BPD refinery and 2.6 MM Bbl Marine Terminal at Corpus Christi
6 Harvest Pipeline 16", 10" 230,000 Corpus Christi
Gardendale to Corpus Christi; Expand to 350,000 BPD; 80,000 BPD existing Pearsall P/L plus new 150,000 BPD Gardendale P/L
Delivers into Martin Midstream terminal in Corpus Christi; Built 90,000 BPD Pipeline from Karnes County to Three Rivers
7Double Eagle Pipeline; Magellan/Kinder JV
14" 150,000 Corpus ChristiCondensate Pipeline; Gardendale in west and Karnes in east into Three Rivers
Feeds into 500,000 bbl Magellan storage terminal in Corpus Christi; Statoil and Talisman Energy commitments
8Plains (Purchased from US Development Group)
n/a Rail facility St. James, LAGardendale terminal can ship 40,000 BPD crude/Condensate to St. James with 100 car unit trains
9Enbridge-Exploring Eagle Ford condensate shipments to Canada
n/aSouthern Light
CanadaOpen season for 50,000 BPD additional capacity; currently 180,000 BPD
10 Howard Energy/Live Oak Railroad n/aRail Road Hub
MultipleLive Oak County for Eagle Ford crude and drilling material
11Sunoco Logistics Partners - Eaglebine Express Pipeline
n/a 60,000 Houston
Binding Open Season announced May 2013 to transport production from the Eaglebine and Woodbine crude areas to Nederland, Texas
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Map of Major Eagle Ford Shale Take Away Projects
Offtake Ports for Marine Shipments from Corpus Christi
Source: ClipperData, Clipper Eagle Ford Crude Shipments, August 2013 15
‘000 BPD
Current Eagle Ford Constraints and Issues
• Competition of Eagle Ford Barrel with Cushing/Permian Barrel – Eagle Ford crude oil will compete directly with Cushing/Permian Basin barrels in the
Houston/Port Arthur Area – Additional Corpus Christi Waterborne shipments will help Eagle Ford crude avoid the
Cushing/Permian crude oil competition and reach better markets – Will crude oil distribution system build outs in Houston take some Eagle Ford off the
water
• Quality of Blended Crude – Continue to see substantial variability in quality – Producers and refineries desire to maintain quality and value of Eagle Ford Shale barrel
through segregation – How does quality drive destination choices?
• Market for High Gravity Crude Oil
– Significant amount of high gravity barrels headed our way – will condensate splitters and export capabilities as well as topping units be enough to absorb supply?
• Will the Success of the Eagle Ford Drive Midstream Companies and
Producers to View Infrastructure Commitments Differently?
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Platts Pipeline Development and Expansion NuStar Energy’s Eagle Ford Program
Thank You