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Shell affiliates are buyers, sellers in $390 million midstream transaction

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Screen Shot 2015-11-12 at 09.52.10Posted on November 11, 2015 | By Joshua Cain

A pipeline subsidiary of Royal Dutch Shell has sold a crude terminal in Illinois and a pipeline system in the Gulf of Mexico for $390 million to a master limited partnership affiliated with Shell.

Shell Midstream Partners, the Houston-based MLP that Shell formed in 2014, said on Wednesday that it will buy Pecten Midstream from another Shell subsidiary, Shell Pipeline Co.

Pecten Midstream operates the Lockport Crude Terminal about 50 miles from Chicago and the Auger Pipeline System, which transports crude oil from parts of the Garden Banks and Keathley Canyon offshore blocks in the Gulf.

The deal would continue a series of Shell moves to raise money by offering investors a stake in its midstream assets. In October of  2014, Shell oversaw a $920 million initial public offering for the new pipeline company. Shell Midstream Partners could then use that cash to maintain and expand its network of pipelines.

Shell and other producers also have been selling some of their pipelines to associated corporate entities to help raise cash as they struggle with low crude oil prices.

Shell Midstream said that it would fund the acquisition in capital markets, by borrowing under existing revolving credit facilities or with cash — or through some combination of the three. The company said it expects the deal to close next Tuesday.

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