July 16, 2014
Enterprise Finds Second Buyer for U.S. Condensate Export, Reaching Limit

Enterprise Products Partners has secured another term condensate export supply contract with a second Japanese commodity trading house, following the first deal with Mitsui in early July, industry sources in the U.S. told OPIS on
Wednesday.

Enterprise will supply to Mitsubishi one 400,000-bbl condensate cargo a month
on a long-term deal, starting in September.

Sources said that Enterprise is very close to hitting its monthly condensate export capacity after the second supply deal due to logistics bottlenecks on the Gulf Coast.

"It is not a question of condensate production or supply. The supplies are there, but there are logistics bottlenecks," a source said. Eagle Ford light condensate production is pegged at close to 1 million b/d, and it is expected to continue to grow significantly over the next few years.

The latest export deal is in line with earlier market expectations of U.S. processed condensate export limit at around 20,000-30,000 b/d or about 600,000 bbl per month for the near term. Both Mitsui and Mitsubishi deals are for about 15,000 b/d each. U.S. condensate could be fed to North Asian refineries or condensate splitters.

The cap on exports is attributed to ongoing work to link up the logistics chain for future exports and the need to supply the domestic market. For exports, a player would need to buy, segregate, store and ship condensate via pipeline to marine terminals on the Gulf Coast.

Enterprise does not have much condensate production, but it is an active condensate buyer in the Gulf Coast market.

Two main condensate suppliers to Enterprise at the well heads are BHP and Pioneer, but both condensate producers are not part of the export deals.

On Monday, OPIS reported that the first U.S. condensate cargo is expected to
be loaded at the end of this week, with a Long Range 1 ship booked for the
trans-Pacific voyage to North Asia.

BW Zambesi, an LR 1 dirty tanker, has been booked by Westport Petroleum for
$1.8 million for the month-long voyage via Panama Canal. The dirty product tanker arrived in Galveston, Texas, late last week, and it is currently at the dry docks for tank cleaning in order to accommodate the condensate cargo.

This 60,000-ton or 420,000-bbl capacity tanker is expected to trade in the clean tanker market after this voyage. The tank cleaning is expected to take about five to seven days at the dry docks.

U.S. oil and shipping market players are watching this first condensate export cargo closely, with an eye on future export opportunities.

OPIS notes that Enterprise may have sold the first processed condensate cargo
out of the U.S. Gulf Coast last week, but the flood gates for more exports will remain shut for the near term.

So far, only Enterprise is able to do that. Enterprise is expected to be the main condensate exporter in the U.S. in the near term as it is the only company that has received an approval from the Commerce Department for processed condensate exports and has the logistics infrastructure in place for export. Enterprise has a large pipeline and terminal system for natural gas liquids, crude and oil products on the Gulf Coast.

Trading sources do not expect master limited partnerships to benefit from the
first trickle of condensate export from the U.S. in the near term. In the longer term, the potential export could be a profitable play when the necessary storage and export facilities are in place.

The U.S. Gulf Coast is already facing a strong demand for marine terminals and
docks due to the growing need for oil products exports, and domestic crude deliveries to East Coast refineries and Canada.

While export is an additional outlet for the growing West Texas production, the primary market for U.S. processed condensate should be the domestic refining,
crude blending and petrochemical markets in terms of economics and logistics.


July 14, 2014
Charterer Books Ship for First U.S. Condensate Export Cargo

The first condensate export cargo is expected to be loaded at the end of this week, with a Long Range 1 ship booked for the trans-Pacific voyage to North
Asia, trading and shipping sources told OPIS on Monday.

BW Zambesi, an LR 1 dirty tanker, has been booked by Westport Petroleum for $1.8 million for the month-long voyage via Panama Canal. The dirty product tanker
arrived in Galveston, Texas, late last week, and it is currently at the dry docks for tank cleaning in order to accommodate the condensate cargo.

This 60,000-ton or 420,000-bbl capacity tanker is expected to trade in the clean
tanker market after this voyage. The tank cleaning is expected to take about five to seven days at the dry docks.

U.S. oil and shipping market players are watching this first condensate export cargo closely, with an eye on future export opportunities.

OPIS reported in early July that Enterprise sold 400,000-600,000 bbl of processed condensate to Mitsui, a major commodity trading house in Japan, and this July cargo is part of a three-month term supply contract. In the U.S., Mitsui is involved in the Marcellus shale gas and Eagle Ford shale oil and gas development and production projects.

Westport, the ship charterer for BW Zambesi, was formed in 1985 and exists as
a wholly owned subsidiary of Mitsui & Co. (USA) and Mitsui & Co. Ltd.

In its only U.S. office at Franklin, Tenn., Westport was focused on fuel oil and bunkering after shutting down its clean products trading office in Pasadena, Calif., in July 2012.

Meanwhile, OPIS notes that Enterprise may have sold the first processed condensate cargo out of the U.S. Gulf Coast last week, but the flood gates for
more exports will remain shut for the near term.

Some trading sources expect the U.S. processed condensate export to be
limited to around 20,000-30,000 b/d or about 600,000 bbl per month for the near term due to ongoing work to link up the logistics chain for future exports and the need to supply the domestic market. For exports, a player would need to buy, segregate, store and ship condensate via pipeline to marine terminals on the Gulf Coast.

So far, only Enterprise is able to do that. Enterprise is expected to be the main condensate exporter in the U.S. in the near term as it is the only company that has received an approval from the Commerce Department for processed condensate exports and has the logistics infrastructure in place for export. Enterprise has a large pipeline and terminal system for natural gas liquids, crude and oil products on the Gulf Coast.

Trading sources do not expect master limited partnerships to benefit from the
first trickle of condensate export from the U.S. in the near term. In the longer term, the potential export could be a profitable play when the necessary storage and export facilities are in place.

The U.S. Gulf Coast is already facing a strong demand for marine terminals and
docks due to the growing need for oil products exports, and domestic crude deliveries to East Coast refineries and Canada.

While export is an additional outlet for the growing West Texas production, the
primary market for U.S. processed condensate should be the domestic refining,
crude blending and petrochemical markets in terms of economics and logistics.

Morgan Stanley Completes Sale of TransMontaigne to NGL Energy Partners

TransMontaigne Partners LP said on Wednesday that Morgan Stanley has completed the sale of its indirect 100% ownership interest in TransMontaigne Inc. to NGL Energy Partners LP.

TransMontaigne Inc. is the indirect parent and sole member of TransMontaigne GP LLC, which is the sole general partner of TransMontaigne Partners LP.

The sale included Morgan Stanley's limited partnership interests in TLP and the
assignment from an affiliate of Morgan Stanley to NGL of certain terminaling
services agreements with TLP.

As a result of the transaction, NGL indirectly acquired a 100% membership
interest in, and control of, the general partner, which controls TLP.

Consequently, the transaction resulted in a change in control of TLP. The transaction does not involve the sale or purchase of any of the limited partnership units in TLP held by the public and the TLP limited partnership units continue to trade on the New York Stock Exchange.

NGL Energy Partners LP is a Delaware limited partnership that owns and operates a vertically integrated energy business with four primary businesses: water solutions, crude oil logistics, NGL liquids and retail propane. In connection with the transaction, Morgan Stanley Capital Group Inc. assigned its interests in certain existing terminaling services agreements with the partnership to NGL.

In addition, the partnership amended its existing Senior Secured Credit Facility
to, among other items, consent to the change of control of TLP resulting from
the transaction and to amend the covenant relating to a future change of control
to reflect NGL as the indirect owner of the general partner interest in TLP.

In connection with the consummation of the transaction, on July 1, 2014
Stephen R. Munger, Goran Trapp and Martin S. Mitchell, each employees of Morgan Stanley, resigned from the board of directors of the general partner.

To fill the vacancy resulting from the resignation of the Morgan Stanley directors, Atanas H. Atanasov, Benjamin Borgen, David C. Kehoe and Donald M. Jensen, each employees of NGL, were appointed to the board of directors of the general partner effective July 1, 2014.

TransMontaigne Partners LP is a terminaling and transportation company based in Denver, Colo., with operations in the United States along the Gulf Coast, in the Midwest, in Houston and Brownsville, Texas, along the Mississippi and Ohio rivers, and in the Southeast.

OPIS reported last week that diversification and low purchase price are keys to
NGL Energy Partners' (NEP) purchase of TransMontaigne, even though the
surprising acquisition appears to have limited synergy between both companies on paper.

Morgan Stanley had TransMontaigne on the selling block for the past year, in
line with Morgan Stanley's plan to exit from the global physical oil market.
NEP, which is a major retail propane player in more than 20 states in the U.S.,
took the market by surprise, emerging as the buyer of TransMontaigne. NEP is to pay a cash purchase price of $200 million, including working capital, plus an
additional amount for inventory transferred at the closing.

There is no immediate synergy between NGL Energy Partners and TransMontaigne, but it (the acquisition) allows NGL to expand its geographical footprint to the Southeast, an analyst said.

"Also, the deal is viewed favorably because of NGL Energy Partners is expanding into refined oil products, crude and water treatment and lowering its exposure to the propane market," he said, adding that NEP bought Gavilon last year for $890 million.

Gavilon represents NEP's refined products market share, but there is little
synergy between Gavilon and TransMontaigne. Gavilon operates mainly in Oklahoma, Texas and Louisiana, while TransMontaigne is focused on the Southeast region.

GreenHunter Pipeline Plans Midwest Pipeline for Oil, Condensate, NGL

Texas-based GreenHunter Resources Inc. said on Monday that its wholly owned subsidiary, GreenHunter Pipeline LLC, will transport oil, condensate and natural gas liquids, along with freshwater and brine, from Pennsylvania and West Virginia to the Ohio River for barge loading.

GreenHunter Pipeline has executed multiple definitive agreements to have exclusive use of three independent pipelines in the Midwest.

GreenHunter Resources is a diversified water resource, waste management, environmental services and hydrocarbon marketing company specializing in the unconventional oil and natural gas shale resource plays.

This new pipeline logistics project covers approximately 34 miles of right-of- way to transport freshwater, oilfield waste water (brine) and hydrocarbons (oil, condensate and NGLs).

The points of receipt (POR) have been chosen in two locations in southwestern Pennsylvania and northwestern West Virginia. These regions have quickly become some of the most densely populated areas for new permitting, drilling and producing in the Marcellus Shale play and the evolving Utica Shale play.

The point of delivery (POD) will be along the Ohio River at one of GreenHunter's barge terminal locations. GreenHunter Pipeline will own and operate the POR and the POD facilities and associated equipment.

Its equity partner, Major Pipeline LLC, will design, build, own and operate the pipeline exclusively for GreenHunter's benefit.

The agreement between GreenHunter Pipeline LLC and Major Pipeline LLC provides exclusive use for transportation of the fluids for a period of 10 years with an option to renew the contracts for an additional 10 years. The terms of the agreements are specific to each type of fluid and priced on minimum volumes of fluid intake per day.

The condensate pipeline will be a 6-inch diameter pipe that will have a capacity of approximately 30,000 b/d. The first phase of the project has begun with right-of-way negotiations underway and is scheduled to be complete and 100% perational by Jan. 1, 2016.

The pipeline destination will also include a processing facility to split condensates into different quality products, typically resulting in higher value for these finished materials for ultimate marketing. The new processing plant for condensate is scheduled to be completed on or before the third quarter of 2016.

The project includes two other individual pipelines for brine and freshwater shipping.

Phase two of the project may consist of additional extensions to the primary gathering lines, extending further into Pennsylvania and possibly into Ohio. The parties anticipate the second phase to begin construction prior to the completion of the first phase.

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