The $80-85 million project is the first phase of anticipated infrastructure and storage capital expenditures to address additional customer demand at Oiltanking Houston.

The project includes the following scope:

Reversal of an existing 24″ pipeline that currently originates from Oiltanking Houston to multiple Houston Ship Channel refineries;

Extension of the reversed 24″ pipeline to connect to Genoa junction, located on the south side of the Houston Ship Channel;

Construction of a new 30″ pipeline from Oiltanking Houston along the Houston Ship Channel to the area refineries previously served by the 24″ pipeline; and

Construction of one million barrels of crude oil storage at the Partnership’s Houston terminaling facility.

Due to the expansion of crude oil supplies in the U.S. from domestic shale plays and Canadian oil sands, additional long haul pipeline systems are either in development or under construction to transport crude oil to the Houston market and supply the Gulf Coast refineries. Additionally, other pipelines are being built or reversed to deliver crude oil from Cushing and West Texas to the Gulf Coast refineries and to alleviate the current over-supply situation in Cushing, Oklahoma.

The new project provides connectivity to Genoa junction and has been designed to accommodate additional customer throughput volumes as growing crude oil supplies reach the Houston Ship Channel market. In addition, the Partnership is poised to construct additional crude storage tankage to support the rising customer demand at Oiltanking Houston.

Carlin G. Conner, President, CEO and Chairman of the Board, stated, “Over the last three decades, Oiltanking Houston has built a premier crude oil distribution center by investing in pipeline connectivity, expansive deep waterfront, and substantial crude tankage.

“In anticipation of these new crude supplies being delivered to the Houston market, we are expanding and strengthening the premier crude oil distribution system in the Houston Ship Channel by connecting to these pipeline junctions and building additional tankage. Interest from both existing customers and new customers, including refiners, producers and marketers, reaffirms our expectation of strong increases in demand for new crude capacity.

“In addition to the expansion projects currently approved, we foresee additional tank expansion opportunities developing with the dramatic shift in crude oil logistics. As appropriate, we will prudently evaluate these opportunities in the future with the goal of increasing our distribution to unit-holders over time. By connecting to the planned inbound flows of new crude sources, along with our superior waterfront and premier distribution systems, we believe Oiltanking Houston will be well positioned for continued growth,” concluded Conner.

The Partnership has obtained the required environmental and internal approvals to commence construction and expects to complete construction of the pipelines and approximately one million barrels of new crude oil storage capacity during the first quarter of 2013. The new storage capacity is in addition to the one million barrels of crude storage currently being constructed at the Houston terminaling facility. Once complete, the expansion will bring total active storage capacity across all products at the Partnership to approximately 18.8 million barrels. The partnership currently has low leverage levels, and as such, anticipates funding the entire project with debt.

The expansion project is expected to be accretive to distributable cash flow once the pipeline and additional storage is operational in the first quarter of 2013 and is expected to generate returns of approximately 6-8 times EBITDA, or earnings before interest, taxes and depreciation, generally targeted for organic expansion projects.

Oiltanking Partners, L.P. is a master limited partnership engaged in independent storage and transportation of crude oil, refined petroleum products and liquefied petroleum gas. We provide our services to a variety of customers, including major integrated oil companies, distributors, marketers and chemical and petrochemical companies. Our assets are located along the upper Gulf Coast of the United States. For more information, visit www.oiltankingpartners.com .