HollyFrontier 2015 Annual Report Download - page 24

Download and view the complete annual report

Please find page 24 of the 2015 HollyFrontier annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 122

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122

Table of Content
16
UNEV Interest Transaction
On July 12, 2012, HEP acquired from us our 75% interest in UNEV. We received consideration consisting of $260.0 million in
cash and 1.0 million HEP common units. UNEV owns the UNEV Pipeline, a 12-inch refined products pipeline running from Salt
Lake City, Utah to Las Vegas, Nevada together with terminal facilities in Cedar City, Utah and North Las Vegas.
Legacy Frontier Pipeline and Tankage Asset Transaction
On November 9, 2011, HEP acquired from us certain tankage, loading rack and crude receiving assets located at our El Dorado
and Cheyenne Refineries. We received non-cash consideration consisting of promissory notes with an aggregate principal amount
of $150.0 million and 3.8 million HEP common units.
Transportation Agreements
Agreements with HEP
HEP serves our refineries under long-term pipeline, terminal, tankage and refinery processing unit throughput agreements expiring
in 2019 through 2030. Under these agreements, we pay HEP fees to transport, store and process throughput volumes of refined
products, crude oil and feedstocks on HEP's pipelines, terminals, tankage, loading rack facilities and refinery processing units that
result in minimum annual payments to HEP, including UNEV (a consolidated subsidiary of HEP). Under these agreements, the
agreed upon tariff rates are subject to annual tariff rate adjustments on July 1 at a rate based upon the percentage change in Producer
Price Index (“PPI”) or Federal Energy Regulatory Commission index. As of December 31, 2015, these agreements result in
minimum annualized payments to HEP of $244.9 million.
Our transactions with HEP including the transactions discussed above and fees paid under our transportation agreements with
HEP and UNEV are eliminated and have no impact on our consolidated financial statements.
Agreement with Alon
HEP has a 15-year pipelines and terminals agreement with Alon expiring in 2020, under which Alon has agreed to transport on
HEP's pipelines and throughput through its terminals, volumes of refined products that results in a minimum level of annual
revenue. The agreed upon tariff rates are increased or decreased annually at a rate equal to the percentage change in PPI, but will
not decrease below the initial tariff rate. Also, HEP has a capacity lease agreement with Alon under which Alon leases space on
HEP's Orla to El Paso pipeline for the shipment of up to 15,000 barrels of refined product per day. The terms under this agreement
expire in 2018 through 2022.
As of December 31, 2015, HEP's assets include:
Pipelines
• approximately 810 miles of refined product pipelines, including 340 miles of leased pipelines, that transport gasoline,
diesel and jet fuel principally from our Navajo Refinery in New Mexico to our customers in the metropolitan and rural
areas of Texas, New Mexico, Arizona, Colorado, Utah and northern Mexico;
• approximately 510 miles of refined product pipelines that transport refined products from Alon's Big Spring refinery in
Texas to its customers in Texas and Oklahoma;
• two 65-mile pipelines that transport intermediate feedstocks and crude oil from our Navajo Refinery crude oil distillation
and vacuum facilities in Lovington, New Mexico to our petroleum refinery facilities in Artesia, New Mexico;
• one 65-mile intermediate pipeline that is used for the shipment of crude oil from the gathering systems in Barnsdall and
Beeson, New Mexico to our Navajo Refinery.
• approximately 940 miles of crude oil trunk, gathering and connection pipelines located in west Texas, New Mexico and
Oklahoma that primarily deliver crude oil to our Navajo Refinery;
• approximately 8 miles of refined product pipelines that support our Woods Cross Refinery located near Salt Lake City,
Utah;
• gasoline and diesel connecting pipelines that support our Tulsa East facility;
• five intermediate product and gas pipelines between our Tulsa East and Tulsa West facilities;
• crude receiving assets located at our Cheyenne Refinery;
• a 75% interest in the UNEV Pipeline, a 427-mile, 12-inch refined products pipeline running from Woods Cross, Utah to
Las Vegas, Nevada;
• a 50% interest in Frontier Pipeline, a 289-mile crude oil pipeline running from Casper, Wyoming to Frontier Station, Utah
through a connection to the SLC Pipeline; and
• a 25% interest in the SLC Pipeline, a 95-mile intrastate crude oil pipeline system that transports crude oil into the Salt
Lake City, Utah area from the Utah terminus of the Frontier Pipeline, as well as crude oil flowing from Wyoming and
Utah via Plains Rocky Mountain Pipeline.