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Shell Midstream buying pipelines, terminals for $825m

Houston’s Shell Midstream Partners is going on a buying spree, acquiring $825 million worth of pipelines and terminals from its Royal Dutch Shell parent.

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The deals designed to beef up the three-year-old Shell Midstream business give the Houston pipelines firm more ownership in Gulf Coast and Gulf of Mexico pipelines, as well as a slew of terminals from the Houston area to Washington state.

The drop-down acquisitions from the parent Shell and other Shell subsidiaries give Shell Midstream majority ownership of the Mars and Odyssey oil pipelines in the Gulf of Mexico. Shell Midstream already owned 49 percent stakes in the pipelines and the deal ups those stakes to at least 71 percent.

The acquisition also includes a Houston-area terminal in Pasadena, as well as four other terminals in Portland, Seattle, Anacortes, Wash.; and Des Plaines, Ill.

Lastly, the deal a 10 percent stake in the massive Explorer pipeline that runs from Houston to Midwestern refineries, as well as a 41.48 percent stake in the much smaller LOCAP pipeline in southern Louisiana. The Explorer system also is owned by Phillips 66, Marathon Petroleum and Energy Transfer Partners subsidiaries.

Shell started the midstream business in 2014 in part to attract new investors, and boost the value to its U.S. pipeline assets. Shell Midstream a publicly traded master-limited partnership, which is a uniquely American tax-avoiding corporate structure that requires the companies to distribute most of their income to investors in payments similar to stock dividends. MLPs are popular with pipeline companies.

“Big Oil” rival BP recently followed suit, launching BP Midstream Partners in October on the New York Stock Exchange.

This first appeared on the Houston Chronicle – an Energy Voice content partner. For more click here. 

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