Houston-based Kinder Morgan Energy Partners LP has agreed to buy the transmix refining business of Buckeye Pipe Line Co., general partner of Buckeye Partners LP, Emmaus, Penn., for $37 million in cash plus net working capital. The deal is set to close before the end of October.
Transmix is a by-product of refined products pipeline operations, created by the mixing of different specification products during pipeline transportation. Transmix processing plants split the substance back into specification products such as unleaded gasoline and diesel fuel.
The purchased business, which has operated as Buckeye Refining Co. LLC, has transmix processing facilities in Indianola, Penn., and Hartford, Ill.
Kinder Morgan also has agreed to purchase transmix from Buckeye's pipeline operations.
Bill Shea, president and CEO of Buckeye Pipe Line, said that Buckeye determined that the transmix processing operations "are not a good strategic fit with our core pipeline transportation and terminaling business."
Kinder Morgan, with existing transmix processing facilities in Virginia, Maryland, and California, will become the largest processor of transmix in the United States when the transaction closes.
"This acquisition strengthens our existing transmix processing business and allows us to provide additional fee-based services to our core refined products businesses," said Richard D. Kinder, chairman and CEO of KMP. "We � will continue to look for additional opportunities to expand our transmix processing business."
KMP currently owns a 50% interest in a transmix processing plant in Colton, Calif., and processing plants in Richmond, Va., and Dorsey Junction, Md.
Buckeye's Indianola, Pa., facility is located on a 30-acre site near Pittsburgh and is accessible by truck, barge and pipeline, primarily processing transmix from Buckeye, Colonial, Sun, and Teppco pipelines. It has 12,000 b/d of processing capacity.
The Hartford, Ill. facility was constructed in 1993 on property owned by Conoco Inc. and is accessible by truck, barge, and pipeline, primarily processing transmix from Explorer and Conoco pipelines. It has 5,000 b/d of processing capacity.