Private equity infrastructure investor ArcLight Capital Partners LLC said Dec. 29 it will buy Gulf Oil LP but it won’t keep four of the company’s Pennsylvania terminals for long.

ArcLight will divest Gulf’s four light petroleum product terminals after reaching a deal to address anticompetitive claims raised by the Federal Trade Commission (FTC).

ArcLight affiliate Chelsea Petroleum Products Holdings LLC completed the purchase of Gulf from Cumberland Farms Inc. on Dec. 29.

On Dec. 30, Arc Logistics Partners LP (NYSE: ARCX) said that after the Gulf deal closed, it entered into an FTC-mandated agreement to buy four of Gulf’s terminals in Altoona, Mechanicsburg, Dupont and South Williamsport, Pa.

Arc Logistics said the transaction is expected to close by mid-January.

No amounts were disclosed by the various parties involved in the transactions.

The FTC said ArcLight’s acquisition would have further concentrated its ownership in Pennsylvania, where the firm this year purchased invested in upstream and midstream assets. The FTC was concerned the Gulf deal would likely have substantially reduced competition in:

  • Altoona, where ArcLight would own the only terminal handling gasoline and one of two terminals handling distillates;
  • Scranton, where ArcLight would own one of two terminals handling gasoline and distillates; and
  • Harrisburg, where ArcLight would own one of two terminals handling gasoline and one of three terminals handling distillates.

In 2015, ArcLight purchased Pyramid LLC, a petroleum pipeline terminals and logistics business and entered a joint venture with Rex Energy Corp. (NASDAQ: REXX) in the Butler operated area.

The Gulf terminals receive, store and deliver gasoline, distillates, ethanol and biodiesel via pipeline and/or truck connectivity and offer ethanol and biodiesel blending and additive injection services to its customers. They include 28 storage tanks with 816,000 barrels of shell capacity and more than 20 acres of land available for development for customer-driven commercial activities.

ArcLight and Gulf agreed to divest the terminals to Arc Logistics with several conditions to ensure that they remain “viable and competitive” during their transition in ownership, an FTC order said.

Among other conditions, ArcLight agreed to maintain minimum throughput volumes at the terminals for two years. The deal, which gives Arc Logistics a foothold in the state, will be financed with a combination of available cash and borrowings from the partnership’s senior secured revolving credit facility.

“Gulf is well-established among consumers as a top tier brand and in recent years has experienced significant growth of marketed volumes,” said Dan Revers, managing partner and co-founder of ArcLight. “The ownership of a major petroleum wholesaler and terminal operator represents a significant opportunity in today’s energy industry and is a key component of our investment strategy.”

Gulf is a terminal operator and wholesaler of refined petroleum products, including heating oil, diesel fuel, and gasoline, and marketed 3.3 billion gallons of products in 2014.

Gulf owns and operates a comprehensive network of 12 proprietary refined product storage terminals, with connectivity via the Buckeye and Laurel pipelines as well as barge access that allows it to source product from Canada, Europe, the Caribbean and all of the major U.S. refining markets.

The acquisition of Gulf is the second major terminal deal by ArcLight in the past 12 months. The deal was pursued through ArcLight Energy Partners Fund VI LP, which ArcLight said raised $5.6 billion in commitments in July.

Contact the author, Darren Barbee, at dbarbee@hartenergy.com.