The system consists of two pipelines. One, the Amdel Pipeline, is a 503-mile, 10-inch, common-carrier crude-oil pipeline with a capacity of 27,000 barrels per day. It begins at Sunoco Logistics' Nederland Terminal between Beaumont and Port Arthur and ends at Midland, Texas.
The other, the White Oil Pipeline, is a 25-mile, 10-inch crude-oil pipeline with a capacity of 40,000 barrels per day. It begins at the Amdel Pipeline and terminates at Alon USA's Big Spring, Texas, refinery.
The pipelines are idle, but are scheduled to resume operating June 1.
Alon USA (NYSE: ALJ - News) of Dallas has agreed to ship a minimum of 15,000 barrels per day on the pipelines under a 10-year throughput-and-deficiency agreement, which is a standard means of allowing shippers to provide financial support to a pipeline investment. Alon has an option to extend the agreement by four additional 30-month periods.
Sunoco Logistics (NYSE: SXL - News) expects to complete a $12 million program to expand the Amdel Pipeline's capacity from 27,000 to 40,000 barrels per day, and to construct new tanks at the Nederland Terminal to handle the increased volume by the end of the year.
The acquisition is the third announced by Sunoco Logistics in the past six weeks.
The transaction is expected to close by the end of the first quarter, subject to customary closing conditions.
Sunoco Logistics is a master limited partnership that Sunoco Inc. formed to buy, own and operate its refined-product and crude-oil pipelines and terminal facilities.
Sunoco, which refines oil, sells gas and makes coke and petrochemicals, spun off Sunoco Logistics in an initial public offering in 2002, but still owns about 48 percent of Sunoco Logistics' units.
Both Sunoco Logistics and Sunoco are based in Philadelphia.
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