Houston (Platts)--13Dec2012/147 pm EST/1847 GMT

NuStar Energy has entered into a long-term pipeline and terminal services agreement with ConocoPhillips that will expand the liquids terminal and pipeline operator's South Texas Crude Oil Pipeline System, NuStar said Thursday.

The agreement will include a pipeline expansion project for NuStar that serves ConocoPhillips' growing Eagle Ford Shale production in South Texas, NuStar said in a statement. Also, new pipeline and terminal facilities will give Eagle Ford producers a transportation alternative for their growing production, the terminal and pipeline operator said.

NuStar President and CEO Curt Anastasio said in a statement that the expansion, "backed by major producers like ConocoPhillips, cements NuStar's position as a key logistics provider for the Eagle Ford Shale play."

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Last month, NuStar said it agreed to buy TexStar Midstream Services LP's crude oil pipeline, gathering and storage assets and NGL assets in the Eagle Ford region for $425 million.

Closing of the TexStar acquisition is "imminent," NuStar spokesman Chris Cho said Thursday.

Meanwhile, Anastasio said NuStar has "extensive" pipeline and terminal assets already operating throughout the area with the capacity to support an expansion of the size it announced on Thursday. The infrastructure will help support what he called the Eagle Ford's "incredible" production growth.

NEW PIPELINE TO EXPAND SYSTEM

A new NuStar pipeline will originate at a 100,000-barrel NuStar terminal to be built near Pawnee, Texas. That line will connect to NuStar's existing 12-inch pipeline system between Pettus and Three Rivers, Texas. NuStar will connect its existing 12-inch pipeline to its Oakville, Texas, terminal for crude delivery to the NuStar North Beach terminal.

The crude will be transported to Corpus Christi via NuStar's existing 16-inch pipeline, and via new pipeline connections that will be built to Corpus Christi refineries.

Also, NuStar will provide truck-receiving facilities at the new Pawnee terminal and at the recently completed Oakville terminal.

In addition, NuStar said it is building a new ship dock in Corpus Christi to support the North Beach terminal under a long-term lease with the Port of Corpus Christi. The private dock facility and refinery connections will enable NuStar to further expand its pipeline systems to meet growing South Texas production, the company said.

The pipeline expansion project will be completed during fourth-quarter 2013, while the new dock facilities are projected to be finished in first-quarter 2014, NuStar said.

Anastasio said NuStar expects to invest $100-$120 million for the expansions, which are backed by a 10-year throughput commitment. He said the projects should generate around $15 million/year in incremental EBITDA once fully implemented, while the expansions would generate some EBITDA next year, the bulk will be earned in 2014 and beyond.

--Starr Spencer, starr_spencer@platts.com
--Edited by Robert DiNardo, robert_dinardo@platts.com

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