The three unit train terminals acquired, together with KMP’s existing ethanol terminal assets, will create a nationwide distribution network of ethanol handling facilities connected by rail, marine, truck and pipeline. This network will help meet the nation’s growing need for biofuels, mandated by the Renewable Fuels Standard. With the new terminal and pipeline venture and existing operations, KMP expects to handle in excess of 218,000 barrels per day of ethanol in 2010.
As part of the transaction, KMP and USD have entered into a joint venture agreement which will optimize and coordinate customer access to the expanded distribution platform and facilitate the rapid expansion of additional ethanol logistics facilities throughout the United States. “This new network will give our combined customers unparalleled access to major markets across the country,” said KMP Terminals President Jeff Armstrong. The acquisition price for the terminals was approximately $195 million, including over $80 million in KMP equity issued to the seller. Upon closing, the transaction is expected to be immediately accretive to cash distributable to KMP unitholders. Combined with other acquisitions and projects already completed or underway, KMP has invested approximately $500 million in the renewable fuels handling business.
“We look forward to partnering with Kinder Morgan, a national leader in fuel transportation and storage, to revolutionize the way that biofuels are delivered to market,” said Dan Borgen, president and CEO of U.S. Development Group. “The venture will offer immediate, significant efficiencies for our customers and we look forward to continuing to work with them in the new expanded platform. USD is committed to maintaining the level of customer service across the expanding network that our customers expect.”