Our Company
Plains All American Pipeline, L.P. is a publicly traded master limited partnership (“MLP”) engaged in the transportation, storage, terminalling and marketing of crude oil, refined products and NGL. We are also engaged in the development and operation of natural gas storage facilities through our direct and indirect ownership of PAA Natural Gas Storage, L.P. ("PNG"). We own PNG's general partner, PNGS GP LLC, which holds a 2.0% general partner interest in PNG and all of its incentive distribution rights. We also own an approximate 64% limited partner interest in PNG. For information on the PNG's natural gas storage operations, please click here.
We own and operate a diversified portfolio of strategically located assets that play a vital role in the movement of U.S. and Canadian energy supplies. On average we handle over 3.5 million barrels per day of crude oil, refined products and NGL through our extensive network of assets located in key North American producing basins and transportation gateways. We are headquartered in Houston, Texas, and our common units are traded on the New York Stock Exchange under the symbol "PAA." Our operations can be categorized into three primary business activities:
Transportation— Our transportation segment operations generally consist of fee-based activities associated with transporting crude oil, NGL and refined products on pipelines, gathering systems, trucks and barges. We generate revenue through a combination of tariffs, third-party leases of pipeline capacity and transportation fees. Our transportation segment also includes our equity earnings from our investments in Settoon Towing and the White Cliffs, Butte, Frontier and Eagle Ford pipeline systems, in which we own noncontrolling interests. As of December 31, 2012 and adjusted for expected sale of assets on February 22, 2013, we employed a variety of owned or leased long-term physical assets throughout the United States and Canada in this segment, including approximately: ~16,500 miles of active crude oil, NGL and refined products pipelines and gathering systems; 20 million barrels of storage capacity 582 trailers; 104 transport and storage barges and 51 transport tugs through our interest in Settoon Towing
Facilities— Our facilities segment operations generally consist of fee-based activities associated with providing storage, terminalling and throughput services for crude oil, refined products, NGL and natural gas, NGL fractionation and isomerization services and natural gas processing services. We generate revenue through a combination of month-to-month and multi-year leases and processing arrangements. Revenues generated in this segment include (i) storage fees that are generated when we lease storage capacity, (ii) terminal throughput fees that are generated when we receive crude oil, refined products or NGL from one connecting source and redeliver the applicable product to another connecting carrier, (iii) loading and unloading fees at our rail terminals, (iv) hub service fees associated with natural gas park and loan activities, interruptible storage services and wheeling and balancing services, (v) revenues from the sale of natural gas, (vi) fees from NGL fractionation and isomerization and (vii) fees from gas processing services.
As of December 31, 2012, we owned and employed a variety of long-term physical assets throughout the United States and Canada in this segment, including: Our facilities segment includes our investment in PNG. PNG currently owns and operates natural gas storage capacity, as described above, at its Bluewater facility in Michigan, Southern Pines facility in Mississippi and Pine Prairie facility in South Louisiana.
Supply and Logistics — Our supply and logistics segment operations generally consist of the following merchant activities:
The purchase of U.S. and Canadian crude oil at the wellhead, the bulk purchase of crude oil at pipeline, terminal and rail facilities, and the purchase of cargos at their load port and various other locations in transit; The storage of inventory during contango market conditions and the seasonal storage of NGL; The purchase of NGL from producers, refiners and other marketers; The resale or exchange of crude oil and NGL at various points along the distribution chain to refiners or other resellers to maximize profits; and The transportation of crude oil and NGL on trucks, barges, railcars, pipelines and ocean-going vessels to various delivery points, including but not limited to refineries, connecting carriers and fractionation facilities.
The majority of activities that are carried out within our supply and logistics segment are designed to produce a stable baseline of results in a variety of market conditions, while at the same time providing upside potential associated with opportunities inherent in volatile market conditions (including opportunities to benefit from fluctuating crude oil quality differentials). These activities utilize storage facilities at major interchange and terminalling locations and various hedging strategies to provide a balance. The tankage that is used to support our arbitrage activities positions us to capture margins in a contango market or when the market switches from contango to backwardation.Except for pre-defined inventory positions, our policy is generally (i) to purchase only product for which we have a market, (ii) to structure our sales contracts so that price fluctuations do not materially affect the segment profit we receive, and (iii) not to acquire and hold physical inventory, futures contracts or other derivative products for the purpose of speculating on outright commodity price changes. In addition to substantial working inventories associated with its merchant activities, as of December 31, 2012, our supply and logistics segment also owned significant volumes of crude oil and NGL classified as long-term assets for linefill or minimum inventory requirements under service arrangements with transportation carriers and terminalling providers. The supply and logistics segment also employs a variety of owned or leased physical assets throughout the United States and Canada, including approximately: In connection with its operations, the supply and logistics segment secures transportation and facilities services from our other two segments as well as third-party service providers under month-to-month and multi-year arrangements. Intersegment sales are based on posted tariff rates, rates similar to those charged to third parties or rates that we believe approximate market rates. However, certain terminalling and storage rates recognized within our facilities segment are discounted to our supply and logistics segment to reflect the fact that these services may be canceled on short notice to enable the facilities segment to provide services to third parties, generally under longer term arrangements.
We purchase crude oil and NGL from multiple producers under contract and believe that we have established long-term, broadbased relationships with the crude oil and NGL producers in our areas of operations. Supply and logistics activities involve relatively large volumes of transactions, often with lower overall margins than transportation and facilities operations. Supply and logistics activities for NGL typically consist of smaller volumes per transaction relative to crude oil.
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