Dallas-based Sunoco LP and NuStar Energy LP, San Antonio, Texas, on April 9 announced the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act), in connection with Sunoco’s $7.3 billion acquisition of NuStar (GM Jan. 26, p. 1). They noted that the expiration is an important condition for the completion of the transaction.
A NuStar unitholder vote is scheduled for May 1. The transaction is expected to close shortly after unitholders give approval to the deal.
The acquisition will expand Sunoco’s crude oil transportation and storage. NuStar’s assets, which include pipelines and terminals for ammonia, oil, chemicals, and other fuel-related products, are mainly in the Midwest and West Coast.
Sunoco said the deal will allow it to diversify, increase its ability to use more of its own terminals, buy up a key part of its supply chain, and allow it to optimize fuel supply cost. It will also allow Sunoco to expand its presence across more of the US, the company said.
NuStar has 9,500 miles of pipeline and 63 terminals, while Sunoco is the largest US independent fuel distributor with 42 product terminals, serving motor fuel to approximately 10,000 convenience stores, independent dealers, commercial customers, and distributors located in more than 40 US states and territories.
Sunoco CEO Joseph Kim told analysts that the company would be able to accelerate expansion opportunities within the NuStar Ammonia System’s 2,000-mile ammonia pipeline. The company sees the potential due to the growing low carbon ammonia capacity, which benefits the pipeline and storage and export out of its St. James, La., facility.
“In fact, projects have been announced for construction in the US for low carbon ammonia production totaling about 38 million tons per year that will be in service between 2025-2030,” NuStar CEO Brad Barron told analysts in a Nov. 2 earnings call.
Barron said that because NuStar’s system runs through the Midwest down to the Gulf Coast, where the vast majority of the announced production capacity will reside, and because of NuStar’s decades of experience in ammonia transport, the company is ideally positioned to become the premier low carbon ammonia provider in the US and to provide export service to Asia, Europe, and other markets.
Barron said the company does not have to expand pipeline capacity but just add connections. Going forward he expects additional volumes from new demand, with firm space on the line garnering a premium. NuStar expects to announce a project with a large global ammonia producer in early 2024. The company spent $25 million for expansion in the segment in 2023.
NuStar was expected to connect a 14-mile ammonia pipeline to OCI Global NV’s Iowa Fertilizer Co. (IFCO) in Wever, Iowa, earlier this year (GM May 5, 2023). The 2,000 pipeline spans seven states from Louisiana, north along the Mississippi River to Missouri, and then northwest and east, to Nebraska and Indiana.
NuStar’s is the only US ammonia pipeline after Magellan Midstream Partners LP’s 1,100-mile line from Borger, Texas, to Mankato, Minn., gradually closed a few years ago (GM March 19, 2021; Aug. 9, 2019).