Global Partners LP (GLP) Investor Presentation May Bakken Product Markets & Takeaway Capacity Congress January 29, 2014 Denver, CO

Transcription

1 Global Partners LP (GLP) Investor Presentation May 2012 Bakken Product Markets & Takeaway Capacity Congress 2014 January 29, 2014 Denver, CO

2 Global Partners at a Glance Leader in the logistics of transporting crude and related products from the mid-continent region of the U.S. and Canada 10 MM barrels of storage capacity Approximately 5.0MM barrels of storage with direct rail and deep water access Daily throughput of nearly 500,000 bbls, roughly equivalent to the combined output of two East Coast refineries Significant portion of Global s daily demand is sourced from East Coast refiners Expansive, multi-brand gasoline station portfolio Approximately 900 owned, leased or supplied gasoline stations in nine Northeastern states New presence in the Pacific Northwest 2

3 Global s DNA: Sourcing and Logistics Sourcing Gathering Storage Transportation Marketing 3

4 Creating a Virtual Pipeline Solution Building out rail infrastructure across North America s key producing regions and refining centers Western Canada, North Dakota, Mid Continent, Pacific Northwest Currently moving over 7,000 railcars per month Beginning to carry more crude grades to more markets Currently moving over 700 barges annually Speed and delivery consistency lower our customers costs Allows access to premium alternative markets Significantly reduces working capital requirements Long history of strong relationships with East, West and Gulf Coast refiners 4

5 Why are We So Enthused About Rail. We feel Rail provides maximum utility to the entire economy Many beneficiaries as rails build out, upgrade and increase efficiency across a multitude of high volume lines: Rail has proven to be a safe and reliable method of transporting bulk commodities Intermodal, Agriculture, Metals, Coal and many other industries will eventually benefit, possibly even passenger trains Crude Oil gains in many particular ways A decrease of working capital requirements for product in transit Optionality is valued more as pricing patterns have proved to be more dynamic Long term commitments and take-or-pay agreements are less onerous Refiners will now be able to select crudes and blends that best meet margin refinery needs In the long run, this is likely to be more about Energy-by-Rail, rather than just Crude-by-Rail Pipelines WILL continue to be a major necessity, but expect to see more convergence between the two transport methods in the future We view our position as a logistics provider, but involved in marketing almost by necessity 5

6 The First Thing to Ask is What is Bakken Crude? Bakken crude is a light, sweet crude, like so many of the other growing basins on the continent Density is generally around API Some hotter areas exist, which can be problematic Blending seems to exist in some locations Rapidly growing production and a strong requirement for infrastructure Fairly commoditized barrel, meaning some variability, but for most part, quite readily exchangeable/interchangeable/swapable/tradable Logistics flows are highly dependent on the emergence of other new crudes and around new major infrastructure projects An ever dynamic system to solve in conjunction with both pipeline and rail The Bakken can easily go to either the East Coast, West Coast or Gulf Coast, not to mention the Mid-Continent We think of the Bakken as just a light, sweet crude, with a lot of optionality The Bakken is just one part of a very dynamic system A myriad of crude grades factor into the optimization solution 6

7 Wholesale Supply Infrastructure A Similar Problem Supply Infrastructure: Limited Product Pipelines in Northeast Limited Crude Pipelines to East and West Coasts Vancouver Anacortes Billings Minneapolis Salt Lake City Casper Chicago Guernsey Wood River New York Patoka Cushing 1.2 Refining centers capacity (Million bpd) Beaumont Houston Products pipeline distribu8on Source: Energy Policy Research Foundation Inc. Source: IHRDC Logistical Advantages High Barriers to Entry The limited number of pipelines and refining capacity in the Northeast limits competition from other distribution networks/channels Optimization and Efficiency Our network of terminals is a gateway for the receipt, storage and distribution of refined petroleum products, renewable fuels and crude oil Virtual Pipeline Solution Rail efficiency and optionality to East and West coasts are competitive logistical differentiators Built-in Market Clearing Strategically located, intermodal terminals provide an efficient and a cost-effective mechanism to move product in and out of our system 7

8 Rail has jumped into the Public Eye Railroads have safely and reliably been moving bulk commodities for over a century, BUT there is major public concern Railroads need to continue to invest in safety More and better passing sidings Higher grade track where units are prevalent Railcar standards are likely to undergo further revisions Over 75% of the existing fleet, by one estimate, does not meet expected future standards We anticipate that nearly every car will need to have some retrofitting, but as of yet we are not sure what that may entail When will we see the railcar market bifurcate between old and new Broker quotes still relatively stagnant in differentiating car types Ethanol standards will also be impacted as will the emerging trade in refined products by rail We could see another round of shortages and the landscape may change significantly The multitude of railcar vintages and designs makes it difficult to swap train sets to improve efficiency 8

9 What efficiencies still need to come into the Bakken? Railcar and grade concerns have reduced the amount of swapping of train sets that exist in markets like ethanol Maximization of single line hauls reduces aggregate freight costs, yet the practice of multi-line hauls seems as prevalent as ever The swapping of train sets will mature in the future, but the railcar specification standards have added a new conundrum to the equation Tankage is still not sufficient to ensure the producer of the rateability they require to operate Rail and trucks are lumpy and therefore excess capacity needs to be constructed to ensure smooth flow like a pipeline Gathering and pipe connections are being expanded into rail terminals, improving the system over time Weather problems and other issues continually making us question how much storage is enough? 9

10 What has been Happening Historically? $140 $130 $120 $110 $100 $90 BRENT WTI LLS $80 $70 $60 1/5/2010 1/5/2011 1/5/2012 1/5/2013 1/5/

11 Domestic Markers are Converging Differen8als $18.00 BRENT, LLS and WTI $16.00 $14.00 $12.00 $10.00 $8.00 $6.00 $4.00 $2.00 $- F4 G4 H4 J4 K4 M4 N4 Q4 U4 V4 X4 Z4 F5 G5 H5 J5 K5 M5 N5 Q5 U5 V5 X5 Z5 Brent - WTI LLS - WTI Brent - LLS *Intraday Spreads on January 23,

12 What is this forward telling us!!! BRENT - LLS $14.00 $12.00 $10.00 $8.00 $6.00 $4.00 $2.00 $0.00 F4 G4 H4 J4 K4 M4 N4 Q4 U4 V4 X4 Z4 F5 G5 H5 J5 K5 M5 N5 Q5 U5 V5 X5 Z5 12

13 Unique Origin-to-Destination Assets Global Partners Single Line Haul, East-West Infrastructure Clatskanie, OR Terminal Basin Columbus, ND (CP) Basin Beulah, ND (BNSF) Albany, NY Terminal Storage capacity = 200,000 barrels Clatskanie, OR Terminal (BNSF) Serviced by the BNSF Railway through the Genesee & Wyoming short-line Deepwater marine terminal with access to 1,200-foot leased dock Situated along Columbia River Consists of crude transloading, ethanol production plant and storage Combined rail loading capacity = 160,000 bpd Basin Columbus, ND (CP) Economically advantaged single-line long-haul to Albany 100,000-barrel storage tank and truck-and-rail loading rack Connected facility to Tesoro Logistics High Plains Pipeline System New 170,000-barrel tank slated for completion in 2014 Basin Beulah, ND (BNSF) Direct long-haul service to the West Coast and Gulf Coast Construction completed on two 140,000-barrel storage tanks with truck and rail loading systems Rail off-loading capacity = 160,000 bpd Albany, NY Terminal (CP) 1.4 million barrels of storage capacity Intermodal terminal linked via single-line haul to CP Enables offloading of two 120-car unit trains in a 24-hour period Averaging just 4 to 5 days one-way per train shipment Products shipped by barge from Albany to East Coast refiners 13

14 Conclusions The Bakken is just one of a myriad of light, sweet crudes rising in prominence in North America The dynamics will continue to shift this barrel to multiple markets, more than just about any other barrel The barrel will be competing for line space against other crudes into many markets, as well as competing for rail assets well Pipeline and rail will both continue to be major players in the space Optionality and Flexibility is key Tankage, railcar fleets and destination access will guide how the barrel gets placed Long run, the strongest logistics pattern prevail Currently, the markets are signaling the best values on the East and West Coast Infrastructure continues to improve but more work needs to be done Gathering connectivity, storage buildout, associated asset buildout North American crudes are cementing their position in the global market as the costs continue to come down as we improve technology, increase monetization of by-products and as infrastructure begins to materially improve wellhead values 14