NuStar to sell S.A. refinery, buy Eagle Ford pipelines

By Vicki Vaughan

NuStar Energy LP said it will boost its investment in the Eagle Ford Shale and sell its San Antonio refinery as part of a plan to focus on more stable operations.

San Antonio-based NuStar said it will buy a crude oil pipeline and related assets, along with natural gas liquids assets, in the Eagle Ford Shale from TexStar Midstream Services LP for $425 million. The company also said it will sell its 14,500-barrel-a-day refinery on South Presa Street, along with a terminal in Elmendorf and a pipeline that connects the terminal to the plant.

NuStar CEO Curt Anastasio said in a statement that the Eagle Ford Shale acquisition and refinery sale are part of the company’s strategic shift away from refining and marketing to focus on more stable fee-based pipeline and storage operations.

The refinery’s sale will enable NuStar to pay down debt and focus on expansion projects, he said, adding that the refinery “has attracted strong bidder interest.”

The company expects to announce a definitive agreement in the next few weeks.
NuStar bought the refinery out of bankruptcy in April 2011 for $41 million and has invested $49 million in improvements since then, company spokeswoman Mary Rose Brown said in an email.

NuStar expects the purchase of TexStar’s crude oil assets to close in early December, subject to regulatory review, while the acquisition of natural gas assets should be completed early in the first quarter of 2013.

NuStar will integrate the crude oil and natural gas system with its existing pipelines in the region.
The crude oil pipeline system goes from LaSalle and Frio counties to Live Oak County. The system is now transporting about 60,000 barrels a day of crude oil but should reach its 100,000 barrels-a-day capacity in the next few months, NuStar said.

NuStar also is buying five storage terminals that are placed along the pipeline system.

NuStar will finance the Eagle Ford purchase by borrowing and through junior subordinated notes.
“With this acquisition, we are capturing the opportunity to fill up previously underutilized and idle pipelines and to construct new pipeline connections and other logistics assets for further growth,” Anastasio said.