On Jan. 19, Kinder Morgan Energy Partners, L.P. (KMP), announced a terminal venture aimed at handling renewable fuels. KMP is acquiring three unit-train ethanol-handling terminals from U.S. Development Group (USD). The terminals are located in Linden, N.J.; Baltimore, Md.; and Dallas, Texas.
KMP and USD have also entered into a joint venture agreement that they say will optimize and coordinate customer access to an expanded distribution platform. The companies expect that the joint venture will enable rapid creation of additional ethanol logistics facilities as well.
"We look forward to partnering with Kinder Morgan, a national leader in fuel transportation and storage, to revolutionize the way that bio-fuels are delivered to the market," said Dan Borgen, president and CEO of U.S. Development Group. "The venture will offer immediate, significant efficiencies for our customers, and we look forward to continuing our working relationship with them in the new expanded platform. USD is committed to maintaining the level of customer service that our customers expect across the expanding network."
"This new network will give our combined customers unparalleled access to major markets across the country," said KMP Terminals President Jeff Armstrong. 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.
KMP said the acquisition price for the terminals was approximately $195 million, including over $80 million in KMP equity issued to the seller. Upon closing, the transaction is expected to be immediately accretive to cash distributable to KMP unitholders. The company added that it has invested approximately $500 million in the renewable fuels handling business.