Platts Pipeline Development and Expansion NuStar Energy`s Eagle

Platts Pipeline Development and Expansion
NuStar Energy’s Eagle Ford Program
Presented by Mike Crossey
September 17, 2013
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NuStar Overview
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
1
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
2
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
Pettus South Pipeline Reactivation Project for Koch Pipeline
NuStar’s Oakville Terminal
Existing NuStar Pipeline Reversals
New 12” Pipeline Constructed for Valero
South Texas Crude Oil System (Acquired from TexStar)
PAWNEE
NuStar Overview
OAKVILLE
PETTUS
THREE RIVERS
REFINERY
Koch
Mayo Sta.
Valero
West Plant
NORTH BEACH
CORPUS CHRISTI
3
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
Pettus South Pipeline Reactivation Project for Koch Pipeline
NuStar’s Oakville Terminal
Existing NuStar Pipeline Reversals
New 12” Pipeline Constructed for Valero
South Texas Crude Oil System (Acquired from TexStar)
PAWNEE
12”
NuStar Overview
OAKVILLE
PETTUS
THREE RIVERS
REFINERY
Koch
Mayo Sta.
Valero
West Plant
NORTH BEACH
CORPUS CHRISTI
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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
Pettus South Pipeline Reactivation Project for Koch Pipeline
NuStar’s Oakville Terminal
Existing NuStar Pipeline Reversals
New 12” Pipeline Constructed for Valero
South Texas Crude Oil System (Acquired from TexStar)
PAWNEE
12”
NuStar Overview
OAKVILLE
PETTUS
THREE RIVERS
REFINERY
Koch
Mayo Sta.
Valero
West Plant
NORTH BEACH
CORPUS CHRISTI
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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
Pettus South Pipeline Reactivation Project for Koch Pipeline
NuStar’s Oakville Terminal
Existing NuStar Pipeline Reversals
New 12” Pipeline Constructed for Valero
South Texas Crude Oil System (Acquired from TexStar)
PAWNEE
12”
NuStar Overview
OAKVILLE
PETTUS
THREE RIVERS
REFINERY
Koch
Mayo Sta.
Valero
West Plant
NORTH BEACH
CORPUS CHRISTI
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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
12”
12”
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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
NuStar’s Throughputs in the Eagle Ford
Shale Expected to Increase
500
428
400
308
300
200
100
198
320
228
161
175
4Q 2012
2Q 2013
200
0
Throughputs (MBPD)
4Q 2013
Capacity (MBPD)
4Q 2014
10
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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Eagle Ford Production vs. Takeaway Capacity
Eagle Ford Production vs. Takeaway Capacity Projections
(Barrels per Day in thousands)
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
Historical Eagle Ford Crude Production
•
•
•
Bentek Crude Projection
Total Eagle Ford Pipeline Takeaway Capacity
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
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Major Eagle Ford Shale Take Away Projects
No.
Company
1
NuStar Energy
2
Line
Size
Capacity
BPD
Primary
Destination
Various
428,000
Corpus Christi
Enterprise
24"
350,000
Houston
3
Plains-Enterprise JV
24"
350,000
4
Kinder Morgan Eagle Ford
Crude/Condensate
24"
300,000
5
Koch Pipeline/Flint Hills Resources
20"
350,000
Route
Gardendale to Corpus Christi Marine
Terminal; Three Rivers - Corpus Christi
Crude Pipelines; Pettus to Corpus
Christi Pipeline; Pawnee to Corpus
Christi Pipeline
Wilson County to Sealy, Texas; Fed from Houston area refineries; ECHO
existing gathering system
Terminal
Corpus Christi Gardendale to Sealy/Houston or Corpus Move crude and condensate;
and/or Houston Christi Marine Terminal
Delivers to Three Rivers
Houston
DeWitt County to Houston; Building 27- Move crude to upper ship channel
mile, 12'' lateral to Phillips 66 Sweeney and Galena Park condensate
refinery (100,000 BPD)
facility in 2014
Corpus Christi
Various 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
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
Feeds into 500,000 bbl Magellan
storage terminal in Corpus Christi;
Statoil and Talisman Energy
commitments
6
Harvest Pipeline
7
Double Eagle Pipeline;
Magellan/Kinder JV
14"
150,000
Corpus Christi
Condensate Pipeline; Gardendale in
west and Karnes in east into Three
Rivers
8
Plains (Purchased from US
Development Group)
n/a
Rail facility
St. James, LA
Gardendale terminal can ship 40,000
BPD crude/Condensate to St. James
with 100 car unit trains
9
Enbridge-Exploring Eagle Ford
condensate shipments to Canada
n/a
Southern
Light
Canada
Open season for 50,000 BPD additional
capacity; currently 180,000 BPD
10
Howard Energy/Live Oak Railroad
n/a
Rail Road
Hub
Multiple
Live Oak County for Eagle Ford crude
and drilling material
11
Sunoco Logistics Partners - Eaglebine
Express Pipeline
Houston
Binding Open Season announced May
2013 to transport production from the
Eaglebine and Woodbine crude areas to
Nederland, Texas
Source: Company Websites
16", 10"
n/a
230,000
60,000
Connections
Corpus Christi area refineries,
NuStar Corpus Christi North Beach
Terminal; Open Season Announced
for Expansion of South Texas Crude
Oil Pipeline System
13
Map of Major Eagle Ford Shale Take Away Projects
14
Offtake Ports for Marine Shipments from Corpus Christi
‘000 BPD
Source: ClipperData, Clipper Eagle Ford Crude Shipments, August 2013
15
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
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