HOUSTON - Bracewell & Giuliani LLP is representing Phillips 66 Partners LP (NYSE: PSXP) in agreements with Paradigm Energy Partners, LLC to form two joint ventures to develop midstream logistics in North Dakota that will enhance crude oil transportation. The two projects are the Sacagawea Pipeline ("Pipeline JV") and Palermo Rail Terminal ("Rail JV"). The estimated total capital cost for the joint ventures is $300 million.
Pipeline JV will own an 88 percent ownership interest in Sacagawea Pipeline, LLC, and 12 percent interest will be owned by Grey Wolf Midstream, LLC. Pipeline JV will own and construct a crude oil storage terminal and central delivery point for crude gathering systems in Keene, North Dakota. Still in development, the Sacagawea Pipeline project is a 76-mile pipeline that will deliver crude oil from various points in McKenzie County to destinations that allow for rail and pipeline take away options. In the agreement, Phillips 66 Partners and Paradigm will each own 50 percent interest in the joint venture, and each will fund a share of the construction costs.
Rail JV will own the Palermo Rail Terminal in Palermo, which will have a crude oil rail loading capacity of 100,000 barrels a day, with the capability to expand to 200,000 barrels a day. The site will have access to the Sacagawea Pipeline and provide rail access for third party shippers through the BNSF railway. Phillips 66 Partners will own between 50 to 70 percent interest, and will construct and operate the rail. Paradigm's ownership percentage will be dependent on achieving milestones associated with Pipeline JV. Each party will fund a portion of the construction costs and final ownership interests will be determined prior to closing.
These transactions are expected to close in the fourth quarter of 2014.
Bracewell attorneys involved in the transaction include:
Partners: G. Alan Rafte and Elizabeth McGinley
Associates: Christopher J. Miller, Kate Champion and Kate D. Barrington