Kinder Morgan Energy Partners, L.P. (NYSE: KMP) Tuesday announced a locomotive terminal venture designed specifically to handle renewable fuels. The transaction includes KMP’s acquisition of three unit train ethanol handling terminals in Linden, N.J., Baltimore, Md., and Dallas, Texas, from U.S. Development Group (USD), and the formation of a joint venture to coordinate access to these terminals, other assets KMP already owns and operates, and other projects under development.
The acquisition price for the terminals was approximately $195 million,
including over $80 million in KMP equity issued to the seller.
The three unit train terminals acquired, together with KMP’s existing ethanol terminal assets, are intended to create a nationwide distribution network of ethanol handling facilities connected by rail, marine, truck and pipeline. With the new terminal and pipeline venture and existing operations, KMP expects to handle in excess of 218,000 barrels per day of ethanol in 2010.
As part of the transaction, KMP and USD have entered into a joint venture agreement which will optimize and coordinate customer access to the expanded distribution platform and facilitate the rapid expansion of additional ethanol logistics facilities throughout the United States. “This new network will give our combined customers unparalleled access to major markets across the country,” said KMP Terminals President Jeff Armstrong.
Upon closing, the transaction is expected to be immediately accretive to cash distributable to KMP unitholders. Combined with other acquisitions and projects already completed or underway, KMP has invested approximately $500 million in the renewable fuels handling business.
Kinder Morgan Energy Partners, L.P. (NYSE: KMP) is a pipeline transportation and energy storage company in North America. KMP owns an interest in or operates more than 28,000 miles of pipelines and 170 terminals. Its pipelines transport natural gas, gasoline, crude oil, CO2 and other products, and its terminals store petroleum products and chemicals and handle bulk materials like coal and petroleum coke. KMP is also a provider of CO2 for enhanced oil recovery projects in North America.
Earlier this month, ethanol producer Poet, and Magellan Midstream Partners, L.P. (NYSE: MMP) announced a joint venture to assess the feasibility of a 1,800-mile ethanol pipeline from the Midwest to distribution outlets in the northeast.
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