uploads///supply and logistics SEGMENT

Overview: Plains All American Pipeline’s supply and logistics segment


Sep. 16 2014, Updated 9:00 a.m. ET

Supply and logistics

Plains All American Pipeline, L.P.’s (PAA) supply and logistics segment offers marketing activities like:

  • Purchasing U.S. and Canadian crude oil and NGLs from producers
  • Storing inventory
  • Reselling or exchanging crude oil and NGL to refiners or other resellers
  • Transporting crude oil and NGL from various delivery points to end users

As of December 31, 2013, the segment owned

  • 12 million barrels of crude oil and NGL line fill in pipelines
  • 843 trucks
  • 982 trailers
  • 7,400 crude oil and NGL railcars

Operations in this segment are dependent on the transportation and facilities services from PAA’s other two segments, as well as third-party service providers under month-to-month and multiyear contracts.

Supply and logistics services include crude oil and NGL purchases, crude oil and NGL sales, and crude oil and NGL exchanges.

Crude oil and NGL purchases

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PAA purchases crude oil and NGL from multiple producers under contracts that generally range from 30 days to five years. PAA uses its assets in the other two segments to transport the crude oil to the market. Plus, PAA purchases NGL from producers, refiners, and other NGL marketing companies under contracts that typically range from immediate delivery to one year in term.

Crude oil and NGL sales

PAA’s crude oil customers include major integrated oil companies, independent refiners, and other resellers. Customers include Marathon Petroleum (MPC), Exxon Mobil (XOM), ConocoPhillips (COP), and Phillips 66 (PSX). Most of these companies are components of the Energy Select Sector SPDR Fund (XLE).

NGL is primarily sold to propane and refined product retailers, petrochemical companies, and refiners.

Crude oil and NGL contracts generally range in term from 30 days to one year.

Crude oil and NGL exchanges

Through exchange agreements, PAA is able to buy crude oil or NGL that differ in terms of geographic location, crude oil grade, NGL type, or other factors. Generally, companies enter into exchanges to acquire crude oil or NGL at locations that are closer to their end markets, which help reduce transportation costs.

The following part talks about PAA’s assets by its product platform.


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