UNEV Pipeline LLC Purchases One Terminal and Plans to Build Two More

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Researched by Industrial Info Resources (Sugar Land, Texas)--UNEV Pipeline LLC has announced that it has completed the purchase of a refined products terminal in Cedar City, Utah, from Musket Corporation (Dallas, Texas) for $9.8 million. UNEV Pipeline LLC is a joint venture owned 75% by Holly Energy Partners LP (NYSE: HEP) (Dallas), a subsidiary of Holly Corporation (NYSE: HOC) (Dallas), and 25% by Sinclair Transportation Company (Salt Lake City, Utah).

The terminal was opened by Musket Corporation in January 2007. The 9.1 million-gallon terminal is made up of seven tanks (three 1.54 million-gallon distillate fuel oil tanks, one 1.54 million-gallon ethanol tank and two 1.47 million-gallon gasoline tanks), a loading rack and the rail facilities.

The terminal is conveniently located near the site where UNEV is preparing to build a refined products terminal in Cedar City. The new 6.3 million-gallon terminal will consist of six tanks ranging from 210,000 gallons to 2.3 million gallons. UNEV will utilize the two terminals to support the eastern end of its planned 406-mile, 12-inch diameter, 60,000-barrel-per-day pipeline. The western end of the terminal will connect to UNEV's planned terminal in Overton, Nevada. The Overton terminal will have eight tanks ranging from 630,000 to 2.31 million gallons, totaling 12.6 million gallons.

Engineering for the two new terminals and the pipeline is being handled by CH2M Hill Incorporated (Denver, Colorado). Master Corporation of Odessa, Texas, is expected to begin construction of the new terminals within the next month. UNEV is awaiting a record of decision from the Bureau of Land Management to proceed with construction on the pipeline. The record of decision is expected in early 2009, and construction of the pipeline is expected to take approximately one year.

Once operational, the pipeline will supply the rapidly growing Las Vegas and southern Utah markets with refined petroleum products from Holly's Wood Cross Refinery, which is located neat Salt Lake City. The refinery announced in 2006 its plans to upgrade its crude oil processing capabilities in order to process black wax crude oil and heavy Canadian sour crude oils. Currently, the Las Vegas area relies almost exclusively on two Kinder Morgan pipelines that run from a terminal near San Bernardino, California, carrying fuel from California refineries. One of these pipelines carries jet fuel and the second delivers slightly over 6.5 million gallons of gasoline per day. The UNEV pipeline will add 2.5 million gallons of gasoline and diesel per day; it can be expanded to transport over 5 million gallons per day and could also later be used to carry jet fuel.

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