Tallgrass Energy Partners, LP (NYSE: TEP) today announced two
strategic acquisitions by its Tallgrass Terminals business and
several significant commercial developments that continue to expand
the variety of services offered by Pony Express in key crude oil
producing basins it serves.
“Today’s announcements, along with last week’s news of the
five-year contract extension with Pony Express’ largest customer,
continue to solidify Pony Express’ track record as a reliable and
diverse pipeline and strengthens its ability to serve crude oil
markets for decades to come,” said David G. Dehaemers Jr.,
Tallgrass Energy President and Chief Executive Officer. "With news
of increasing crude oil production in basins Pony Express serves,
we’re even more confident that utilization of our pipeline will
continue to increase in the future.”
Tallgrass Terminals Strategic
Acquisitions
Pawnee Terminal
Tallgrass Terminals, LLC (“Tallgrass Terminals”) has entered
into an agreement to acquire a 51 percent membership interest in
the Pawnee, Colo. crude oil terminal (“Pawnee Terminal”) from
Zenith Energy for approximately $31 million. The Pawnee Terminal is
an injection point for the Tallgrass Pony Express Northeast
Colorado Lateral (“NECL”), with 300,000 barrels of storage and
backed by minimum volume commitments of approximately 90,000
barrels per day. The Pawnee Terminal will provide commercial and
operational synergies with Pony Express and offers the potential
for incremental sourcing opportunities such as directly connecting
nearby producers. Tallgrass Terminals expects the transaction to
close in Q1 2018, subject to certain closing conditions.
Deeprock Development Expansion
In addition, Tallgrass Terminals has acquired a 38 percent
interest in Deeprock North, LLC ("Deeprock North"), which owns a
crude oil terminal in North Cushing, Okla., immediately adjacent to
the Deeprock Development, LLC ("Deeprock Development") crude oil
terminal facility. The purchase price for the interest was $19.5
million or approximately eight times current cash flow. Immediately
following the acquisition, Deeprock North was merged into Deeprock
Development. After the acquisition and merger, Deeprock Development
now owns a larger and more diverse terminalling complex with total
storage capacity of 4.0 million barrels. Tallgrass Terminals owns
approximately 60 percent of the combined entity and retains
significant strategic and commercial control. Tallgrass expects the
acquisition to enhance and expand Tallgrass Terminals’ commercial
offerings for both Pony Express customers and other customers in
Cushing.
Pony Express Commercial Updates and
Developments
Successful Platteville Extension Open Season
Pony Express recently concluded a successful binding open season
to secure committed shipper contracts for crude oil transportation
of a new common stream on the Platteville Extension. The open
season resulted in additional unaffiliated third-party commitments
of 10,000 barrels per day for a total of 37,500 barrels per day of
short-haul and long-haul binding transportation commitments. The
55-mile Platteville Extension is approximately 60 percent complete
and expected to begin operations in April 2018, with the associated
Grasslands Terminal expected to be in service in Q4 2018. The
initial capacity of the Platteville Extension will be approximately
40,000 barrels per day, increasing to approximately 80,000 barrels
per day once the Grasslands Terminal is in service.
Record Volume Throughput Expected in January 2018
In late December 2017, Pony Express shippers nominated more than
10 million barrels, or approximately 325,000 barrels per day for
movements in January 2018. If realized, this would constitute the
largest per-day average during a single month in Pony Express'
history. Tallgrass affiliates account for only about 5 percent of
the nominated volumes.
January 2018 In-Service of Two New Refinery Connections
Expected
Construction on the Holly Frontier El Dorado and CHS McPherson,
Kan. refinery connections is complete, with line fill and
commercial service expected in early January 2018 for both.
Once the two new refinery connections are in service, Pony
Express shippers will be able to deliver more than 300,000 barrels
per day to three significant refineries directly connected to Pony
Express, including the currently connected refinery in Ponca City,
Okla.
New Supply Connection
As previously announced, Tallgrass Terminals has a signed,
10-year take-or-pay agreement for 8,000 barrels per day from a new
customer to support the construction of a terminal in the Central
Kansas Uplift. Construction of the terminal is progressing on
schedule, with completion and in-service expected by March 2018.
Upon completion, the terminalling facilities will have delivery
capabilities of approximately 20,000 barrels per day into the Pony
Express mainline, providing the opportunity to accommodate
incremental volumes from the Central Kansas Uplift.
Upon completion of these projects, Pony Express will have
six different supply sources and five
different crude oil streams capable of being batched on the
system.
“We believe the execution of our organically developed
commercial projects by Pony Express and Tallgrass Terminals and the
expansion of Tallgrass Terminals’ complimentary service offerings
through acquisition continue to demonstrate that Pony Express is
the most attractive, diverse and capable crude oil transportation
and logistics system in the regions in which it operates,” said
Matt Sheehy, Tallgrass Energy Chief Commercial Officer. “Diversity
of supply and delivery points, multiple batch shipment capability,
readily available expansion capacity and an attractive tariff rate
solidify Pony Express as a critical part of the country’s crude oil
midstream infrastructure.”
About Tallgrass Energy
Tallgrass Energy is a family of companies that includes publicly
traded partnerships Tallgrass Energy Partners, LP (NYSE: TEP) and
Tallgrass Energy GP, LP (NYSE: TEGP), and privately held Tallgrass
Development, LP. Operating across 10 states, Tallgrass is a
growth-oriented midstream energy operator with transportation,
storage, terminal, water, gathering and processing assets that
serve some of the nation’s most prolific crude oil and natural gas
basins.
To learn more, please visit our website at
www.tallgrassenergy.com.
Cautionary Note Concerning
Forward-Looking Statements
Disclosures in this press release contain forward-looking
statements. All statements, other than statements of historical
facts, included in this press release that address activities,
events or developments that management expects, believes or
anticipates will or may occur in the future are forward-looking
statements. Without limiting the generality of the foregoing,
forward-looking statements contained in this press release
specifically include the level of future utilization of Pony
Express, whether the closing of the Pawnee Terminal transaction
will occur and, if it occurs, whether Pony Express will enjoy any
commercial or operational synergies or additional sourcing
opportunities, whether the Deeprock North acquisition and
subsequent merger with Deeprock Development will expand or enhance
commercial offerings for Pony Express customers or other customers
in Cushing, whether the Platteville Extension, the Grasslands
Terminal facility, the connection to the CHS McPherson, Kan.,
refinery, the connection to Holly Frontier's El Dorado facility or
the Central Kansas Uplift Terminal Facility will be constructed on
time, on budget, or at all and, if constructed, the capacity of
such projects and whether shippers nominating volumes to Pony
Express for January 2018 will actually deliver such volumes. Such
statements are subject to a number of assumptions, risks and
uncertainties, many of which are beyond the control of TEP, which
may cause actual results to differ materially from those implied or
expressed by the forward-looking statements, and other important
factors that could cause actual results to differ materially from
those projected, including those set forth in reports filed by TEP
with the Securities and Exchange Commission. Any forward-looking
statement applies only as of the date on which such statement is
made and TEP does not intend to correct or update any
forward-looking statement, whether as a result of new information,
future events or otherwise, except as required by law.
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version on businesswire.com: http://www.businesswire.com/news/home/20180103005227/en/
Tallgrass EnergyInvestor RelationsNate Lien,
913-928-6012investor.relations@tallgrassenergylp.comorMedia and
Trade InquiriesPhyllis Hammond,
303-763-3568media.relations@tallgrassenergylp.com
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