Global Partners LP (NYSE:GLP) today announced that it has signed a five-year contract with Phillips 66 (NYSE:PSX) under which Global will use its rail transloading, logistics and transportation system to deliver crude oil from the Bakken region of North Dakota to Phillips 66’s Bayway, NJ refinery. The terms of the contract include a take-or-pay commitment from Phillips 66 to receive approximately 91 million barrels of crude oil over the contract term, which equates to approximately 50,000 barrels per day.
“We are proud to partner with one of the world’s leading independent downstream energy companies,” said Eric Slifka, President and CEO of Global Partners. “Phillips 66 and its predecessor has been a long-standing strategic business partner with Global for more than 15 years in the refined products market. More recently, Phillips 66 has been an important customer for Global as we have expanded our crude supply and logistics services. Today’s announcement further enhances our position as a leader in transporting crude by rail from the mid-continent of the U.S. and Canada to the East Coast. This agreement grows our mix of stable fee-based contract income.”
“Global has established a ‘virtual pipeline’ for the reliable transportation of Bakken crude,” said Tim Taylor, Executive Vice President, Commercial, Marketing, Transportation & Business Development of Phillips 66. “Our five-year agreement with Global assures us long-term access to advantaged crude for our Bayway refinery through what we believe is a cost competitive origin-to-destination supply system to the East Coast.”
The Bakken crude oil is expected to be transloaded at Basin Transload LLC’s North Dakota rail facilities. Global has agreed to purchase a 60% interest in Basin Transload. This transaction is expected to close in the first quarter of 2013. As a continuation of the partnership between Canadian Pacific (TSX:CP) (NYSE:CP) and Global, the crude oil will be transported on CP’s rail network from the Bakken directly to Global’s terminal in Albany, NY.