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- 2013 - February - 6th -

BP sells Jacksonville terminal for $12.7M

by Karen Brune Mathis, Managing Editor

BP Products North America Inc. sold its North Jacksonville petroleum bulk storage terminal on Friday to Blanchard Terminal, part of Marathon Petroleum Corp., for $12.72 million.

The Daily Record reported in December that BP Products North America intended to sell the terminal early this year to Marathon Petroleum, according to records filed with the St. Johns River Water Management District.

Marathon Petroleum Corp. announced Friday morning it had completed the transaction with BP to buy several assets, including a refinery in Texas City, Texas; a 1,040-megawatt cogeneration facility; four light product terminals, including the Jacksonville facility; retail marketing contract assignments for about 1,200 branded sites representing about 61,000 barrels per day of gasoline sales; three operating intrastate natural gas liquids pipelines originating at the refiner; and more.

Marathon Petroleum said the deal initially was announced Oct. 8. The base purchase price is about $598 million, plus inventories valued about $1.1 billion.

The agreement also includes an earn-out provision under which Marathon Petroleum could pay up to an additional $700 million over six years, subject to certain conditions.

"This is a unique opportunity to acquire, at an attractive price, a world-scale refinery on the western Gulf Coast that is well positioned to benefit from the growing supply of North American crude oil," said Marathon Petroleum President and CEO Gary Heminger in a news release.

"The refinery and related assets should enhance our current footprint by integrating well with our existing operations. This transaction will provide MPC the opportunity to grow in contiguous markets, expand our export opportunities and further optimize our Gulf Coast operations. We believe this transaction will create long-term value for our shareholders," he said.

"As our history has shown, our focus will remain on the safe and environmentally responsible operations of all of our facilities. We look forward to providing quality products and services to meet the needs of our new branded jobbers. We welcome all of our new employees at the Galveston Bay refinery and product terminals," said Heminger.

The Daily Record reported the sales were part of BP's plans to divest some assets to focus on exploration and what it says are its other strengths.

The special warranty deed was effective Friday and the sale was recorded Tuesday by the Duval County Clerk of Court.

Property records show the Jacksonville terminal

occupies more than 50 acres at 2101 Zoo Parkway. It occupies acreage on both sides of Zoo Parkway, which is known as Heckscher Drive for most of its length.

Duval County records indicate BP bought the property in 1985. The combined taxable value of the parcels sold to Blanchard are shown at $15 million.

News of the sale was included in an Oct. 8 release by BP. The company announced it reached an agreement to sell its Texas City refinery and part of its retail and logistics network in the Southeast U.S. to Marathon Petroleum Corp.

"With today's agreement, the total value of the divestments that BP has agreed since the beginning of 2010 is now over $35 billion," BP announced.

BP said it expected the total to exceed $38 billion by the end of 2013.

Marathon Petroleum agreed to buy the 475,000 barrel-per-day refinery, associated natural gas liquid pipelines and four marketing terminals in the Southeast, which are in Jacksonville, Nashville and in Selma and Charlotte, N.C.

BP said the sale would reduce its presence in the Southeast U.S., but it "remains firmly committed to growing and strengthening our BP-branded retail network and the value of the BP brand east of the Rockies in partnership with BP-branded jobbers and dealers."

BP said it would continue to market in the Southeast U.S. through more than 100 retained jobbers and about 2,400 branded outlets.

It said it would continue to supply retained BP-branded customers through its logistics network, including the four divested product terminals.

Blanchard Terminal Co. LLC, a subsidiary of Marathon, will acquire ownership of and operate the Jacksonville terminal, according to a letter from Simon Richards with the BP North America program management office to the St. Johns River Water Management District.

The ownership transfer could take place Jan. 1, said the letter, dated Nov. 16 and addressed to Victor Castro, director of the district Bureau of Regulatory Support.

Blanchard Terminal Co. operates out of Findlay, Ohio, where Marathon is based.

An agreement between BP and Marathon to transfer the district consumptive use permit was dated Nov. 19.

"BP and Marathon Petroleum Co. LP have entered into an agreement to sell the Jacksonville terminal to MPC, and MPC has directed BP to assign the Jacksonville Terminal to Blanchard," said the agreement.

A BP spokesman did not say how many employees work at the terminal.

"The terminal is being sold as a going concern, so we would expect the Jacksonville employees to stay with Marathon, but that is ultimately Marathon's decision," spokesman Scott Dean said in December in an email.

Marathon Petroleum said it is the nation's fourth-largest refiner, with a crude oil refining capacity of about 1.7 million barrels per calendar day in its seven-refinery system. Marathon-brand gasoline is sold through about 5,000 independently owned retail outlets across 17 states.

In addition, Marathon Petroleum subsidiary Speedway LLC owns and operates the nation's fourth-largest convenience store chain, with about 1,460 convenience stores in seven states. MPC also owns, leases or has ownership interests in about 8,300 miles of pipeline.

BP has been working through the aftermath of the April 20, 2010, explosion aboard the Deepwater Horizon oil-drilling rig in the Gulf of Mexico connected to BP. As a result, 11 people died and others were injured and the explosion led to what has been reported as the largest accidental oil spill in history.

BP is based in London and its U.S. service center is based in Naperville, Ill., near Chicago.

BP has been divesting properties, according to news reports. In reporting third-quarter financial results Oct. 30, BP referred to the divestments.

"BP will continue to reshape and focus its business portfolio around its key operating strengths," it said.

"Since the end of the second quarter, BP has announced agreements for divestments with a total value of over $11 billion, including for the Texas City and Carson refineries and associated assets and a number of non-strategic deepwater fields in the Gulf of Mexico," it said.

"This highly successful divestment programme is about fundamentally reshaping and repositioning our upstream portfolio. It gives BP a differentiated competitive position which plays to our strengths in exploration, deepwater fields, giant fields and gas value chains. It is also biased to oil, which we believe has higher returns potential," said BP group Chief Executive Bob Dudley in a news release.

kmathis@baileypub.com

@MathisKb

(904) 356-2466

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