Kinder Morgan Energy Partners LP announced a terminal venture designed specifically to handle renewable fuels. The transaction includes KMP’s acquisition of three unit train ethanol handling terminals in Linden NJ, Baltimore MD, and Dallas TX from US 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 three unit train terminals acquired, together with KMP’s existing ethanol terminal assets, will create a nationwide distribution network of ethanol handling facilities connected by rail, marine, truck, and pipeline. This network will help meet the nation’s growing need for biofuels, mandated by the Renewable Fuels Standard. 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 that 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.
The acquisition price for the terminals was approximately $195 million, including more than $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. Combined with other acquisitions and projects already completed or underway, KMP has invested about $500 million in the renewable fuels handling business.