HollyFrontier 2014 Annual Report Download - page 24

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Table of Content
16
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.
Tulsa East / Lovington Storage Asset Transaction
On March 31, 2010, HEP acquired from us certain storage assets for $93.0 million, consisting of hydrocarbon storage tanks having
approximately 2.0 million barrels of storage capacity, a rail loading rack and a truck unloading rack located at our Tulsa East
facility and an asphalt loading rack facility located at our Navajo Refinery facility located in Lovington, New Mexico.
Transportation Agreements
Agreements with HEP
HEP serves our refineries under long-term pipeline and terminal, tankage and throughput agreements expiring in 2019 through
2026. Under these agreements, we pay HEP fees to transport, store and throughput volumes of refined product and crude oil on
HEP's pipeline and terminal, tankage and loading rack facilities 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, 2014, these agreements result in minimum annualized payments to HEP of $231.6 million.
Since HEP is a consolidated entity, our transactions with HEP including the transactions discussed above and fees paid under our
transportation agreements with HEP and UNEV, a consolidated subsidiary of HEP, 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, 2014, 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;
• three 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;
• approximately 910 miles of crude oil trunk, gathering and connection pipelines located in west Texas, New Mexico and
Oklahoma that 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 the Tulsa East and Tulsa West facilities; and
• crude receiving assets located at our Cheyenne Refinery.
Refined Product Terminals and Refinery Tankage
• four refined product terminals located in El Paso, Texas; Moriarty and Bloomfield, New Mexico; and Tucson, Arizona,
with an aggregate capacity of approximately 1,200,000 barrels, that are integrated with HEP's refined product pipeline
system that serves our Navajo Refinery;
• one refined product terminal located in Spokane, Washington, with a capacity of approximately 400,000 barrels, that serves
third-party common carrier pipelines;
• one refined product terminal near Mountain Home, Idaho, with a capacity of 120,000 barrels, that serves a nearby United
States Air Force Base;