Oiltanking Partners’ Houston projects will help Enterprise Products

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Key synergies

Enterprise Products Partners’ (EPD) will find synergies through its acquisition of Oiltanking Partners (OILT).

Enterprise Products Partners (EPD) operates a marine terminal on the Houston Ship Channel on the U.S. Gulf Coast that’s able to load propane and butane onto tanker vessels. EPD completed an expansion in March 2013 that increased its loading capacity from 4 million barrels per month to 7.5 million barrels per month.

OILT Project map

Now, let’s see why OILT’s expansion projects in Houston will benefit EPD.

Houston terminal expansion

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OILT’s Houston facility includes a Houston terminal and Appelt terminal. The Houston facility has an aggregate active storage capacity of approximately 16.2 million barrels. OILT is further expanding the capacity by adding 7.0 million barrels of storage capacity. EPD may further increase the capacity to 16 million barrels per month by 1Q16.

LPG export terminal dock expansion and service period expansion

In March 2013, OILT announced an expansion of its relationship with EPD. Through an agreement with EPD, it planned to increase its ability to import and export LPG at the terminal on the Houston Ship Channel. Expected to be completed in 2014, OILT would construct a new vessel dock and add infrastructure to existing docks by investing $44 million. OILT has a margin sharing agreement on all customer vessels loaded at the Houston facility after January 2014.

In addition, OILT has exclusive rights to LPG import and export services on the Houston Ship Channel with EPD.

In January 2014, OILT announced a further expansion of its terminal service agreement with EPD to handle increased volumes of LPG exports at Houston. Under the amended agreement, the primary contract term was extended to 50 years. Also, the prior agreement was expanded to cover all of the U.S. Gulf Coast.

Key stocks and ETFs

Other energy companies engaged in energy transportation and storage activities include Kinder Morgan Partners (KMP), ONEOK Partners (OKS), and Williams Partners (WPZ). Some of these are components of the Alerian MLP ETF (AMLP).

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