Crude Oil Acquisition and Marketing

Our Crude Oil Acquisition and Marketing segment reflects the sale of gathered and bulk purchased crude oil. Our operations in this segment include gathering, purchasing, marketing and selling crude oil, principally in the mid-continent United States. The segment utilizes our proprietary fleet of approximately 375 crude oil transport trucks and approximately 140 crude oil truck unloading facilities, as well as third-party assets.
Specifically, the crude oil acquisition and marketing activities include:

  • Purchasing crude oil at both the wellhead from producers, and in bulk from aggregators at major pipeline interconnections and trading locations;
  • Wellhead volumes of approximately 400,000 barrels per day from approximately 3,000 producers who operate approximately 60 thousand active leases.
  • Storing inventory during contango market conditions (when the price of crude oil for future delivery is higher than current prices);
  • Buying and selling crude oil of different grades, at different locations in order to maximize value;
  • Transporting crude oil on our pipelines and trucks or, when necessary or cost effective, pipelines or trucks owned and operated by third parties; and
  • Marketing crude oil to major integrated oil companies, independent refiners and resellers through various types of sale and exchange transactions.

We completed the following acquisitions in the Crude Oil Acquisition and Marketing business since December 31, 2010:

  • EDF Trading North America - In May 2014, we acquired a crude oil purchasing and marketing business from EDF Trading North America, LLC ("EDF") which consisted of a crude oil acquisition and marketing business and related assets which handle 20 thousand barrels per day. The acquisition also included conversion of a promissory note convertible to equity in a rail facility (see below).
  • Price River Terminal - In May 2014, we acquired a 55 percent economic and voting interest in Price River Terminal, LLC ("PRT"), a rail facility in Wellington, Utah. The terms of the acquisition provide the facility's noncontrolling interest holders the option to sell their interests to us at a defined price. The entity is reflected as a consolidated subsidiary from the date of acquisition.
  • Texon Acquisition and Marketing - In August 2011, we acquired a crude oil acquisition and marketing business from Texon L.P. ("Texon") which consisted of a 75 thousand bpd crude oil purchasing business and gathering assets in 16 states, primarily in the mid-continent United States.

In the second quarter 2014, the Partnership entered into a joint agreement for a 49 percent economic and voting interest in Bayview Refining Company, LLC ("Bayview"). Bayview completed construction in the third quarter 2015 and operates the facility to process crude oil into intermediate petroleum products. The entity is a variable interest entity for which the Partnership is not the primary beneficiary. The Partnership's investment in Bayview is reflected as an equity method investment within the Crude Oil Acquisition and Marketing segment.

Crude Oil Trucking
We own approximately 140 crude oil truck unloading facilities in the mid-continent United States with the majority located on our pipeline systems. Approximately 500 crude oil truck drivers are employed by an affiliate of our general partner and we own and operate a proprietary fleet of approximately 375 crude oil transport trucks. The crude oil truck drivers pick up crude oil at producer sites and transport it to both our truck unloading facilities and third-party unloading facilities for shipment on our pipelines and third-party pipelines. Third-party trucking firms are also retained to transport crude oil to certain facilities.