CUSHING, Okla. - Kinder Morgan Energy Partners, L.P. (NYSE: KMP) on Feb. 28 announced an acquisition and the formation of a crude oil joint venture with Deeprock Energy Resources LLC and Mercuria Energy Trading, Inc., at the Cushing, Okla., crude oil hub.
KMP is investing approximately $25 million for a 50 percent stake in an existing crude oil tank farm that has storage capacity of one million barrels and for the construction of three new storage tanks that will have an incremental storage capacity of 750,000 barrels.
The new tanks are expected to be in service third quarter 2011.
Deeprock will remain the construction manager and will continue to operate the terminal. Mercuria will remain the anchor tenant for the total capacity for the next five years with an option to extend.
Additionally, KMP has entered into a development agreement with Deeprock that gives KMP an option to participate in future expansions on Deeprock's remaining 254 acres of undeveloped land in Cushing.
"This joint venture with Deeprock and Mercuria, in conjunction with our recently announced investment in the WATCO rail company, creates a great platform for future expansions in this key crude oil market," said KMP Terminals President Jeff Armstrong.
The transaction is expected to be immediately accretive to cash distributable to KMP unitholders.