NuStar Energy deal to increase propane supply in Midwest

Pipeline partnership NuStar Energy LP plans to join forces with a Minneapolis-based company to develop an expanded pipeline and terminal network that will increase the supply of propane in the upper Midwest, the companies announced Tuesday.

NuStar’s deal is with CHS Inc., a farmer-owned cooperative and propane supplier in the Midwest and a global energy, grains and foods business.

The deal will increase the availability and dependability of propane in the upper Midwest by using NuStar’s pipeline and terminal network that connects with a hub for propane storage and fractionation in Conway, Kansas. Fractionation is a process that separates natural gas liquids into various products that include propane.

As part of the agreement, San Antonio-based NuStar will increase the volume of propane it moves in its Central East pipeline and terminal system in the Midwest.

NuStar declined to disclose the amount of its capital investment. But it said its capital investments will be backed by long-term agreements with CHS.

NuStar now moves propane on its Central East system, but the new agreement “will give us the opportunity to ... increase the flow of propane in the system,” NuStar spokesman Greg Matula said in an email.

The agreement calls for the construction of an 8-mile, 8-inch pipeline in Conway which will allow an increased propane supply to be delivered to propane terminals on the system, NuStar said.

“A new location for propane delivery will be established at our existing Rock Rapids, Iowa terminal, and propane throughput capacity will be increased at our other delivery locations in the region,” Matula said.

Andrew Combs, vice president of propane for CHS, said the project “will enhance the overall efficiency of our distribution system and assist our customers’ continued growth.”

“CHS has been an outstanding customer and business partner to NuStar for many years,” NuStar CEO Brad Barron said, “and we look forward to taking our relationship with them to an even higher level through this alliance.”

The projects will immediately add to NuStar’s bottom line when they’re completed in the fourth quarter of this year.