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December 5, 2016 • Volume 09, No. 16 MIDSTREAMNEWS Serving the marketplace with news, analysis and business opportunities Sunoco Logistics acquires Energy Transfer Partners for $51B Tesoro buys Western Refining Deal merges two of Energy Transfer Equity’s MLPs into one unit in deal worth $6.4 billion Energy Transfer Equity’s two major midstream MLPs will merge in a $51 billion Tesoro Corp. struck a $6.4 billion deal that will simplify the ETE network and provide a more financially stable platform for deal to acquire Western Refining (WNR) long-term growth, but also significantly reduce distributions for most unitholders in the that will diversify Tesoro’s geographic new entity. Much smaller but more financially stable Sunoco Logistics Partners (SXL) logistics, refining and will officially acquire Energy Transfer Partners (ETP), although the marketing footprint. Tesoro, combined company will which operates along the West operate under the latter SXL to give ETP unitholders 1.5 units Coast and in the Rockies and Bakken, is per ETP unit at $39.29 each. name and the latter’s management. Under gaining a refining and logistics presence in the deal’s terms, SXL will issue 1.5 common units for each ETP common unit, or an equity West Texas and northwestern New Mexico. value of $21.3 billion at the implied price of $39.29 per unit based on the closing price of The deal adds 685 miles of crude gathering SXL prior to the announcement. SXL will assume ETP’s $29.7 billion in outstanding debt. Although the offer implied a 10% premium to ETP’s unit price at the deal Gains 685 miles of crude gathering in Delaware, San Juan basins. announcement, that premium was quickly eroded as the unit prices of SXL and ETP plunged. Continues On Pg 10 in those areas. It also adds three refineries Kinder Morgan, Enbridge oil sands pipelines receive OK to Tesoro’s portfolio for 10 total with capacity of more than 1.1 MMbo/d. PM Trudeau says Trans Mountain and Line 3 in Canada’s best interest Tesoro will acquire WNR at $37.30 Canada has given two companies the green light to expand existing pipelines per WNR share, representing an equity that would provide vital additional capacity out of Alberta’s oil sands as current value of $4.1 billion based on Tesoro’s infrastructure nears capacity. Citing growing oil sands production, Prime Nov. 16 closing of $85.74. The deal Minister Justin Trudeau signed includes assumption of $1.7 billion off on Kinder Morgan’s Projects’ combined capacity will rise from 690,000 bo/d to 1.65 MMbo/d. net debt and the $605 million value of Trans Mountain expansion and a non-controlling interest in Western Enbridge’s Line 3 replacement program. Combined, the projects will increase from Refining Logistics. Continues On Pg 8 their current capacity of 690,000 bo/d to 1.65 MMbo/d. Trudeau said his decision on the two projects was in the best interest of Canada. DEALS FOR SALE Kinder Morgan’s Trans Mountain expansion is especially important, as it would open up markets other than the US for Alberta’s oil sands producers. Canada WEST TEXAS CO2 SALE PACKAGE currently exports less than 1% of its oil to other markets, according to the Canadian 405-Active Producers. 50,000+ Gross Ac. Association of Petroleum Producers. Continues On Pg 4 SACROC FIELD PP Canyon Reef Formation Tallgrass starts Rockies Express; 800 MMcf/d online by YE16 97% OPERATED WI; 83% NRI Current Net Production: ~28,000 BOED Tallgrass Energy Partners was approved to begin service on part of its Zone Three Gas Plant Production: ~30 MMCFD ~28,000 capacity enhancement project for the Rockies Express pipeline (REX), and the 800 Total 3P Reserves: 184.4 MBOE BOED MMcf/d project is on track to be fully online by year’s end. Tallgrass has worked for Original Oil In Place: ~2,800 MMBO nearly two years on the project to boost capacity out of Ohio into Midwestern markets. CONTACT AGENT FOR MORE INFO PP 2505G The 1,698-mile REX pipeline is the only route linking Appalachia and the Rockies. The Zone Three project REEVES CO., TX PROPERTY addresses the bidirectional portion 800 MMcf/d in additional capacity online by YE16. ~4,100-Net Acres. of the line between central Illinois and SOUTHERN DELAWARE BASIN PP Monroe County in eastern Ohio. The project will add 800 MMcf/d in capacity to that Horizontal Drilling. portion and is intended to address existing west-to-east transportation commitments as 2nd & 3rd Bone Spring, Wolfcamp A, B & C 143 Horizontal Locations Identified. ~1,000 well as new demand for east-to-west transportation capacity. Tallgrass is building three Avg ~86-99% OPERATED WI AVAILABLE BOED compressor stations and adding horsepower at two existing stations. Net Production: ~1,000 BOED FERC gave the go-ahead in late November to start operations at the new AGENT WANTS OFFERS DEC 19, 2016 Columbus compressor station in Pickaway County, Ohio; the new St. Paul station PP 1937DV in Decatur County, Indiana; and the expansion of the Chandlersville station in PLS tracks thousands of deals for Muskingum County, Ohio. Continues On Pg 4 sale at www.plsx.com/listings All Standard Disclaimers & Seller Rights Apply. MIDSTREAMNEWS 2 December 5, 2016 Inventories Pipelines PennEast pipeline FEIS Change in Lower 48 Natural Gas Storage delayed to February 200 The final environmental impact 150 2015 statement for PennEast pipeline has been 5 Yr Range 100 delayed from Dec. 16 to Feb. 17 by FERC. The federal agency has asked PennEast’s 50 owners—AGL Resources, 0 5 Yr Avg NJR Pipeline Company, -50 2016 PSEG Power, SJI Midstream, Spectra Energy Partners -100 Gas stores declined 50 Bcf to end and UGI Energy Services—for 46 new -150 Nov. 25 at 3.995 Tcf. The largest drivers of the decline were the East and datasets and 34 corrections to the pipeline -200 Midwest, which each reduced stores application. Notably, FERC said the route -250 by 23 Bcf. Storage is 24 Bcf higher than maps are outdated, incorrect and incomplete. this time last year and 235 Bcf above -300 FERC also instituted a new 30- the five-year average. day public comment period for its draft -350 y environmental impact study because some ug eb Jul Jan Jun Oct Apr F Sep Dec Mar Nov A Ma route changes were proposed after the Source: OTC Global Holdings Market Data and EIA initial period closed. PennEast will install 118 miles of 36-in. pipeline from Luzerne County, Pennsylvania, to Williams’ Current US Petroleum Stocks by Type (MMbbl) Transco interconnect in Mercer County, For Weeks Ending New Jersey. The project includes one new compressor. Net 11/25/16 11/18/16 Change 11/27/15 Westcoast Energy’s High Pine Crude Oil (Excluding SPR) 488.1 489 -0.90 457.2 expansion may be delayed Motor Gasoline 226.1 224.0 2.10 216.9 Westcoast Energy’s High Pine Distillate Fuel Oil* 154.2 149.2 5.00 144.4 pipeline expansion may be delayed nine All Other Oils 472.8 478.5 -5.70 458.4 months unless the company can complete clearing-related work on the Crude Oil in SPR 695.1 695.1 0.00 695.1 South Loop before Jan. 15. Total 2,036.3 2,035.9 0.40 1,972.0 No activity in the Southern *Distillate fuel oil stocks located in the “Northeast Heating Oil Reserve” are not included. Caribou area is allowed between that Note: Data may not add to total due to independent rounding. date and July 15. Westcoast, which does Source: EIA Weekly Petroleum Status Report business as Spectra Energy Transmission, asked the NEB to begin the clearing work Current Natural Gas Stocks by Region (Bcf) Nov. 15 in advance of construction after % % Diff. July 15. The NEB also has yet to approve Net Change From 5-Yr the company’s preliminary Caribou Habitat 11/25/16 11/18/16 Change 11/25/15 YOY Avg. Restoration Plan. East Region 912 935 -23 924 -1.3 0.8% Clearing-related work must be done Midwest Region 1,130 1,153 -23 1,114 1.4 6.3% before Jan. 15. Mountain 258 259 -1 212 21.7 25.2% The High Pine project will add two Pacific 328 328 0 377 -13.0 -9.9% 42-in. loops along the existing system in northeast British Columbia. The first is South Central 1,367 1,370 -3 1,345 1.6 8.7% 6 miles near Wonowon, and the second Total Lower 48 3,995 4,045 -50 3,972 0.6 6.3% is 18 miles south of Dinosaur Lake. The Source: Energy Information Administration: Form EIA 912, “Weekly Underground Natural Gas project includes new compression and Storage Report” and the Historical Weekly Storage Estimates Database. Row and column sums upgrades to the compressor station. The may not equal totals due to independent rounding. expansion will add 240 MMcfe/d. Find more on the midstream sector at www.plsx.com To learn more about PLS, call 713-650-1212 Volume 09, No. 16 3 INFRASTRUCTURE Transformative M&A, Pipelines pipeline OKs top news Obama administration halts Dakota Access construction This issue of PLS’ MidstreamNews, Dakota Access owners Energy Transfer Partners and Sunoco Logistics Partners features two big, transformative M&A say they remain committed to completing the pipeline according to plan—without transactions. Energy Transfer Equity rerouting it around Lake Oahe in North Dakota. On Dec. 4, the US Army Corps of merged its two largest midstream Engineers denied the pipeline the easement it needs to build the project underneath that MLPs, Sunoco Logistics body of water, saying “a more robust analysis of alternatives can be done and should IN THIS Partners and Energy ISSUE be done” before the easement is granted.