Description of Usd Partners Lp's Business Segments
USD Partners LP: Overview of Segments, Products, and Services
USD Partners LP, a publicly traded limited partnership, specializes in providing terminalling services primarily for energy-related products. The companys revenue model is built around charging fixed fees for handling these products on a multi-year, take-or-pay basis, which provides a stable cash flow without requiring ownership of the underlying commodities. As a result, USD Partners LP is insulated from the fluctuations in commodity prices, which may have an indirect effect on the business in the long run.
Terminalling Services
USD Partners LPs terminalling services are critical in facilitating the transportation of hydrocarbons and biofuels. The company currently operates several key terminals that serve different functions:
Hardisty Terminal
- Location: Hardisty, Alberta, Canada - Operational Start: June 30, 2014 - Function: Origination terminal for loading Canadian crude oil onto railcars. - Capacity: Able to load two 120-railcar unit trains daily, with a fixed loading rack featuring 30 loading positions and loop tracks accommodating five unit trains. - Vapor Management: Equipped with a vapor management system that minimizes hydrocarbon loss and enhances safety procedures during loading. - Connections: Inbound crude oil is received via a direct pipeline from Gibson Energy Inc.s Hardisty storage terminal, allowing efficient access to significant storage capacity and major producers. - Contract Structure: Capacity is predominantly contracted through multi-year, take-or-pay agreements with major integrated oil companies, refiners, and marketers. Approximately 83% of utilization is tied to investment-grade customers. - Fee Structure: Customers commit to fees based on minimum monthly commitments or throughput fees; unutilized capacity can yield credits for future fees.
Casper Terminal
- Location: Casper, Wyoming, USA - Operational Start: September 2014 - Function: Crude oil storage, blending, and railcar loading terminal. - Capacity: Comprises six customer-dedicated storage tanks totaling 900,000 barrels and supports railcar loading exceeding 100,000 barrels per day. - Connections: Receives crude oil via a dedicated 24-inch diameter pipeline from the Spectra Energy Partners’ Express Pipeline; also has truck unloading capabilities. - Modularity: The terminal’s design allows for expansion, including a second loading station and additional storage capacity, with minimal operational disruption. - Contract Structure: Multi-year take-or-pay agreements with investment-grade refiners, providing customers the flexibility of minimum monthly commitment fees or throughput fees.
Ethanol Terminals
- Locations: San Antonio, Texas, and West Colton, California - Function: Transloading terminals that facilitate the transfer of ethanol received by rail to trucks, serving local demand. - Capacity: Each terminal has 20 railcar offloading positions and three truck loading positions. - Strategic Advantage: Located close to major gasoline blending terminals, these facilities can capitalize on the anticipated increase of ethanol in transportation fuel due to changing regulations. - Fee Structure: Fixed fees are prescribed based on the volume of ethanol transloaded, with arrangements catering to local market demands.
Fleet Services
USD Partners LP also engages in providing railcars and fleet management services. The company does not own the railcars but collaborates with partners for fleet services under master fleet services agreements structured on a multi-year basis:
- Scope of Services: Includes administrative support, railcar maintenance management, tracking, regulatory compliance, and sourcing of railcars. - Dedicated Fleet: Approximately 75% of the fleet is utilized by customers of the Hardisty terminal, ensuring efficient service and reliability. - Partners: Collaborates with major railcar supply companies to ensure timely access to high-quality railcars with advantageous procurement terms. - Length of Contracts: Typically span five to nine years, incentivizing customers to maintain their terminal service relationships.
Overall, USD Partners LP’s strategic focus on providing essential terminalling services and fleet management in the energy sector positions it favorably within the midstream logistics market, while its fee structures and long-term customer commitments contribute to revenue stability and growth potential.
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