Pipeline giant buys US shipping fleet

Fuel Fix:
Pipeline giant Kinder Morgan Energy Partners will spend nearly $1 billion to move into the tanker business after agreeing to buy two companies that ship oil between U.S. ports, the companies said Monday.

Kinder Morgan said it will buy American Petroleum Tankers and State Class Tankers from affiliates of private equity firms The Blackstone Group and Cerberus Capital Management for $962 million in cash.

The tankers, which operate under the Jones Act to transport crude oil between U.S. ports, will expand Kinder Morgan’s ability to move oil throughout the country.

This will be a new area of business for the Houston-based company, which currently has a stake in or operates 54,000 miles of pipelines and 180 terminals.

The tankers each will have a capacity of 330,000 barrels, although some of the vessels are still under construction.

“We are purchasing tankers that provide stable fee-based cash flow through multiyear contracts with major credit worthy oil producers,” Schlosser said.

American Petroleum Tankers’ fleet includes five tankers, with an average age of four years, making it one of the youngest fleets in the industry, Kinder Morgan said. State Class Tankers is building four vessels, which will be delivered in 2015 and 2016.

Booming U.S. production of oil from shale has outpaced the development of pipelines in some areas. That has left oil companies searching for ways to move oil and increasingly turning to solutions like rail cars, tankers and barges.
These will add to the volume  of business at ports like that at Corpus Christi that is already shipping out shale oil in the place of pipelines.  I think these companies should be able to expand by buying foreign tankers at discounted prices because the US is not importing much oil these days and a lot of them are out of service.


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