Reuters: Deals: TransMontaigne eyes smaller projects for growth

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TransMontaigne eyes smaller projects for growth Mar 13th 2012, 21:31 By Janet McGurty NEW YORK | Tue Mar 13, 2012 5:31pm EDT NEW YORK (Reuters) - Energy services provider TransMontaigne Partners LP (TLP.N) said on Tuesday it would look to grow through smaller projects allowed by Morgan Stanley (MS.N), which owns the company controlling it. Morgan Stanley, which indirectly controls the company's general partner, is a financial holding firm subject to the Bank Holding Company Act. As such, it is looking to lessen exposure to any changes in legislation that could affect hard assets. Banks are under pressure to reduce risk on their balance sheet. As commodity prices rise again, they may face more allegations that they could use such assets to drive prices higher or lower, squeezing them for trading profits. As a result, Morgan Stanley has asked TransMontaigne to shy away from involvement in any "significant" projects. Earlier this year, Morgan Stanley forced TransMontaigne to exit a joint-venture project with Kinder Morgan Inc (KMI.N) called BOSTCO, while retaining the option to sell or buy back its share in the project by next year. BOSTCO is a $430 million storage terminal with initial capacity to hold 6.6 million barrels of black oils and other feedstock located along the Houston Ship Channel, gateway to many large refineries. TransMontaigne carries and stores crude oil, gasoline, diesel and other liquids along the U.S. Gulf Coast, the Mississippi River and across the Midwest and the Southeastern United States. In a fourth-quarter conference call with analysts, the company said it was looking at smaller projects in crude storage, rail offloading and transportation loading. "Given the size of the TransMontaigne, we don't need significant projects to move the dial," said Chuck Dunlap, chief executive of the company. Still in the works is a joint-venture project with Blueknight Energy Partners (BKEP.O) to build 1 million barrels of crude storage at Cushing, Oklahoma, the delivery point for the NYMEX crude oil futures contract. For 2012, the company plans capital expenditure of between $12 million and $15 million, including the cost to finish building the Cushing tanks. TransMontaigne has said it will expand its Collins, Mississippi and East Liverpool, Ohio oil product terminals. Other plans include adding tankage and rail capacity to carry Utica shale oil into its East Liverpool terminal, one of 12 terminal locations on the Mississippi and Ohio rivers with 2.5 million barrels of storage. (Editing by Dale Hudson) Link this Share this Digg this Email Reprints

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